Positive signs for ad industry in Bellwether

by Darren Davidson, Brand Republic 16-Jul-07, 08:30

LONDON - The latest Bellwether report has recorded the strongest upward revision of marketing budgets since 2004 on the back of growing business confidence.

The Institute of Practitioners in Advertising report said the Q2 report found the growth of marketing spend in the second quarter has accelerated, suggesting it may be even higher than first budgeted for at the start of the year.

The IPA said media budgets have seen the strongest increases for more than seven years, with one in five companies reporting upward revisions.

Internet marketing spend outstripped all other media, with 21.8% of companies reporting an increase.

The internet now accounts for an estimated 6% of total marketing spend, the highest proportion yet recorded by the Bellwether. On this basis, annual internet spend is estimated at around £2bn.

Despite the onward march of the internet, main media such as TV, press, radio and cinema, experienced its strongest quarter since Q1 2000, a sharp contrast to the budget trimming seen over the past two-and-a-half years.

The IPA said marketing budgets had been raised in response to strong sales revenue and profits growth, which provided the finance to launch business expansion plans and new product launches.

Increased budgets were most widely reported by service providers, particularly IT and computing and travel and entertainment companies, with budget trimming in the industrial and utilities sector.

Sir Martin Sorrell, chief executive of WPP Group, welcomed the report which mirrors the performance of the group in the UK, but said the UK remained one of its worst performing markets.

Sorrell said: "All very encouraging in a UK context, but not so in comparison to the other geographic markets. The UK remains the laggard, with growth in China, India and Russia leading the way."

However, Anthony Wreford, president and European CEO of Omnicom-owned Diversified Agency Services, said the report was completed before recent terrorist scares and as such urged its upbeat findings to be treated with caution.

Wreford said: "Fieldwork would have been conducted before the most recent terrorist scares and the memories of two years ago, when many clients cut budgets after the July 7 attacks, are still fresh."