Online spend marches on despite weakest rise in marketing spend since 2002

by Joe Lepper, Brand Republic 18-Apr-06, 11:30

LONDON - Marketing spend is continuing to move out of traditional media such as TV and radio and into direct mail and online activity, according to the latest Bellwether Report from the IPA.

The Institute of Practitioners in Advertising's Bellwether Report for the first quarter of 2006 shows that traditional media budgets were slashed for the sixth successive quarter.

The figures show that during 2005, traditional media budgets now make up just 33% of total marketing spend, compared with 37% in the previous year.

Budget setting for 2006/2007, the report says, is "subdued" with only 22.7% of marketing budgets revised upwards, the weakest recorded level since 2002.

Internet advertising was the only sector to have budgets increased during the first quarter of 2006, with 25.8% of marketing budgets reporting an upward revision, the strongest gain for the online sector since the first quarter of 2004.

Direct marketing underwent a marginal cut in current budgets for the first time in three years, but not as severe as cuts in other sectors and as a result its market share increased.

Leading figures in advertising cite consumer caution and tough trading conditions for the figures, as well as the continued trend to invest in online and direct mail to target consumers.

Sir Martin Sorrell, WPP Group chief executive, said: "The IPA Bellwether Report confirms our experience. The UK remains one of the weakest geographical markets at the moment.

"But new media and new technologies are growing rapidly as clients experiment with different approaches and question the value of traditional media."

David Pattison, IPA president, said: "There is optimism that our industry will grow this year, but it looks limited in the current market conditions."

Meanwhile, another report by media agency firm Initiative predicts that global advertising spend will rise by 5.8% this year, with events such as the Winter Olympics and the World Cup fuelling the increase.

This report echoes Bellwether's gloomy picture of the UK and found world market share drifting from Western Europe and the US towards Asia. This year, Asia is set to overtake Western Europe as the second-largest advertising region, with a 23.3% share compared with Europe's 22.7%.

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