Ad budgets buck seasonal decline to show 6% increase

LONDON - Advertising budgets have bucked the typical downward trend for the third quarter of the year, according to the latest Bellwether Report, with an overall rise of 6% in marketing spend.

It is the first time in the history of the survey that there has been a rise in the third quarter of the year, which is traditionally when end-of-year budgets are readjusted.

The figures, compiled by NTC Research on behalf of the IPA, show that the only area to see a decline in budgets was the area that bundles together PR, market research, sponsorship and conferences.

Media advertising showed a small rise of 1.1%, but the IPA said that it contrasted with downward revisions seen between mid 2000 and late 2003, and pointed to further growth.

Direct marketing budgets showed a bigger rise than in the previous quarter, up by 5.5%. It is the fifth time running that DM budgets have shown an increase.

This is in contrast to recent figures from the Advertising Association, which saw DM fall by 2.5% in real terms to £539m. That was seen as a rare slide for the DM industry, which has consistently shown rises while other areas of the industry have fallen back.

The slip in DM spend was seen as a reflection of the move by marketers to spend more money on newspaper and TV advertising to back their brands rather than on tactical DM campaigns.

The biggest riser was internet marketing, up by 18.1%, putting it well ahead of all the other marketing activities monitored by the report.

Stephen Woodford, president of the IPA and chief executive of WCRS, said: "This is an extremely encouraging report and the best we've ever seen in the third quarter, which is usually the time for end-of-year budget readjustments. It shows there is underlying good profitability, although we're beginning to see higher interest rates."

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