Bellwether shows plunge in marketing budgets

by James Quilter, Brand Republic 12-Jan-09, 09:45

LONDON - The quarterly Bellwether survey of marketing budgets has recorded the worst results in its nine-year-history and the fifth successive reduction in spend.

Only 7% of companies reported an upward revision to overall marketing budgets in this quarter's report, while 49% reported a decrease, giving a balance of minus 42%.

The poor findings follow on from the last quarter's report, which was previously the worst on record. For the first time in the survey's history. budgets have been cut for the year ahead.

There were negative readings for all sectors of marketing including internet and internet search, which were the only growth areas in the previous report.

As with the previous quarter the worst readings were for the media and all other categories -- which include PR, events and market research. Each are down by more than 30%.

Moray MacLennan, the president of the IPA and M&C Saatchi Europe chairman said: "This suggests adland in 2009 will be no place for the faint-hearted. Confidence has plummeted and the data suggests a steep decline in GDP in Q1."

The report also found the survey suggested marketers were shifting budgets towards discounting as a means of stimulating demand.

Chris Williamson, chief economist at Markit and author of the report, said: "The Bellwether shows an alarming rate of corporate retrenchment as the recession deepens, with spending on marketing being cut at a rate far greater the ever previously seen over the survey’s history.

"Disappointing sales in all sectors have also led companies to cut budgets for year ahead for the first time since the survey began, suggesting there will be no quick return to growth for marketing spend."

Below: Chart shows net balance of companies revising marketing budgets down in Q4 2008 from the IPA Bellwether survey.

Revisions to marketing budgets in Q4 2008 from the IPA Bellwether survey

Comments

Mark Young - 12/01/2009

So then, what becomes more important - retaining existing clients and hanging onto as much budget as possible or cranking up your new business activity to make sure you're in front of the briefs that are around? I'm convinced this is a scale issue. If you're a massive agency/group then you're going to be collectively exposed. If you're a smart reasonably sized and hungry agency there's business out there. Either way it's time to act smart. Introspectively by really talking openly to your existing clients and listening to them. Outwardly being clear, conscise and emotionally/commercially intelligent to get clients attracted to you. Good relationships that start in tough times and work, inevitably last a long time based on mutual faith and trust. Don't forget people buy people - that never changes.

robin caller - 12/01/2009

For the past year, i have been urging digital agencies - our clientele - to propose data capture and lead generation campaigns to their clients. The logic is clear - it is more efficient if you can obtain the permission of a user to communicate with them directly than to repeatedly pay Google for the same clicker over and over again. I think most digital departments believed that the downturn would not affect digital, believing online was best placed to weather this recession. The point we have been driving is that it does not matter what we think in the online sector - we are not working in a vacuum, and we are not immune to recession. Online has never had a recession before - the previous downturn being a dotcom bubble burst rather than an economy-wide experience. Efficiencies are required across the board. I would expect a growing prevalence of online lead generation and data capture proposals to be tabled to clients now. Hybrid deals are also going to work well - some brand spend, but bounty bonus uplifts for data capture and anything that gives the client a greater chance of emerging from this recession with a larger market share and improved CRM programs.