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Bellwether points to better future for UK ad industry

The recent falls in television and press advertising spending are bottoming out, according to an unusually upbeat Bellwether Report from the IPA.

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The quarterly report, which polled marketing intentions at 260 companies, found many more advertisers planning budgets rises rather than cuts in their marketing budgets.

Based on provisional data on 2007-2008 budgets, the study found a positive net balance of 45% planning to increase marketing spend.

This figure marks the most optimistic forecast since the media boom of 2000-2001, and is in marked contrast to the pessimism of 12 months ago, which pre-empted one of the worst years for UK marketing since 2002.

In the fourth quarter of 2006, 17% of companies reported increased total marketing budgets while 18% reported a decrease, so only a marginal net decline.

Although traditional advertising continued to lose share of total marketing spend, the overall reduction was slight. 18% of companies reported a downward revision but 15% reported an increase.

Internet marketing budgets outperformed all other sectors in the fourth quarter, with a net balance of 31.5% of companies reporting an increase across all business sectors.

Direct marketing was the only main category of marketing, excluding the internet, to report a rise in budgets in the fourth quarter of last year, with 4.1% of companies reporting an increase. Upward budget revisions were linked to new campaigns to meet business expansion as well as a shift in strategy towards direct marketing.

By sector, increases to budgets were most widely reported in IT and computing, travel, entertainment, and the financial services. Budget cuts were most widely reported in FMCG, industrial and utilities and the automotive sector.

Sir Martin Sorrell, chief executive of WPP, said the findings supported the marketing services group's experience in the UK, which was until recently one of its most sluggish markets.

He said "The UK, although recently our weakest market internationally, is stabilising and growing again. Q4 was stronger and budgets for 2007 are promising. Again direct, interactive and internet are the star functional sectors."

The sectors most likely to increase their spend on marketing were services groups, technology providers and retail.

However, industrial, utilities, car manufacturers and consumer good companies were the most likely to cut spending.

David Pattison, the IPA president and chief executive of PHD, said: "The fourth-quarter Bellwether Report indicates that business conditions are continuing to improve with 2007 set to be a positive one for all sectors, with indications that there will be strong growth in future spend for both main media and non-traditional marketing."

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