Marketers slash spending as confidence plunges

Here's a sign of the times: one in four UK companies cut their marketing budgets last quarter. Someone should sell them a message of hope...

by Dave Waller
Last Updated: 18 Apr 2011
25% of marketing execs cut their budgets in the first three months of 2011, compared to 20% who said they'd increased their planned spend - the second consecutive quarter where there's been a net downward trend. That’s according to the quarterly Bellwether survey, produced by the Institute of Practitioners in Advertising and BDO, which cites several all-too-familiar fears: public spending cuts, cash flow problems and cost pressures.

In fact, the survey suggests that confidence among marketing executives has fallen to its lowest level since the deepest darkest days of the recession. Asked about prospects for their industry, nearly 38% of marketing directors were more pessimistic than three months ago - the ‘strongest degree of pessimism since Q1 2009, when the economic downturn was at its worst’, according to the report. We imagine it’d take more than a catchy jingle to wrench them out of a fug like that.

Now we were under the impression that marketing is the last thing you should cut during a downturn. But apparently not. On the contrary, it seems that, as the relatively buoyant conditions of 2010 are eroded by pessimism, such logic becomes suddenly less practical. And if even the arch smile-painters are too depressed to spend money promoting their products, what hope for the rest of us?

Not all areas of the industry are suffering equally. Spend on mainstream media in the first quarter – such as TV, press and radio advertising, and the budget for PR and events – actually saw a marginal increase. Respondents cited new product launches and cheaper advertising rates as reasons to push their budgets up. And it’s no surprise to learn that online marketing enjoyed the biggest boost. Compared to direct marketing and sales promotions (which both took a hit), the web is comparatively cheap, compelling and, crucially, measurable.

On the plus side, in what IPA president (and MT 35 Under 35 alumnus) Nicola Mendelsohn described as a ‘slightly more positive picture’, marketing directors do seem more optimistic about their own fortunes than those of the general market: 39% are apparently budgeting to spend more in 2011 than in 2010. Although to be fair, the IPA also points out that last year, one in three spent less than they said they were going to. You never can tell with these marketing types...
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Marketing Misc

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