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Bellwether reports advertising gloom but growth is expected

UPDATED - The Institute of Practitioners in Advertising's latest state-of-the-nation report carried little good news for the advertising industry, but once more the direct industry was seen to benefit.

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According to today's Bellwether Report, more companies increased their marketing budgets for 2002 than decreased it -- in fact, twice as many reported budgets would go up as down.

The report also had good news for those in direct marketing -- for the fifth consecutive quarter, this sector showed the largest budget rise of all the marketing categories.

However, as expected in the current climate, there are downsides to both these pieces of good news. The IPA says that the marketing budget rises are the weakest in the survey's history. As far as the direct marketing boom goes, it is attributed to companies opting to go for cheaper and more accountable methods of marketing, rather than the traditional high-spending advertising.

One in three companies says they planned to spend more on advertising this year, but again, this is the lowest ever figure in the report's history. However, the number of companies planning to reduce media adspend was marginally lower than last time, down from 29.4% to 28.5%.

What does this mean for the hard-hit advertising sector, already reported to have shed 600 jobs in the last 12 months? The report's author, Chris Williamson of NTC Research, said: "There is clearly much uncertainty with regard to business prospects and advertisers are playing a waiting game. However, the fourth-quarter survey suggests very little deterioration in the outlook for marketing spend since the third-quarter survey."

Harder hit still was what the IPA defines as "other" marketing, including corporate hospitality, public relations, exhibitions and market research. Nearly one-fifth of companies plan to cut expenditure on these categories.

Predictably, the internet sector looks as if it will suffer from a further downturn in spending in 2002. However, 14% of companies reported that they increased internet budgets in the fourth quarter of 2001, while 15% cut budgets in the same period.

Sector-wise, the ones proving resilient to current economic misery are also the ones increasing their budgets for 2002. So while financial services, entertainment/media and travel saw budgets being cut, retail and consumer-orientated sectors, both FMCG and durables, reported the strongest growth in budgets for 2002.

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