Marketing budgets under pressure

Businesses are reducing the amount they spend on marketing and promotion as firms’ confidence is weakened by the economic slowdown, a new report has found.

According to the Institute of Practitioners in Advertising’s latest Bellwether survey, annual marketing budgets in the third quarter of the year have been cut at a rate not seen in the survey’s nine-year history.

The reduction in marketing spend was the fourth in successive quarters and points, the IPA said, to a marked deterioration in business conditions since the summer.

Just 8 per cent of respondents to the survey said that they were more optimistic about prospects for their industry than they were three months ago.

The main budgets to suffer were for traditional media advertising, PR, events, sponsorship and market research.

All marketing categories experienced some reduction, the IPA reported, except spending on internet advertising, which just about held steady.

The only marketing category to deliver any increase was internet search.

Moray MacLennan, the IPA’s president, commented: “I doubt these gloomy results will come as a surprise to anyone. In light of current headlines the biggest surprise may well be that 12 per cent of companies’ budgets were revised upwards.”

Mr MacLennan added: “The industry will be watching the next set of results with great interest hoping that, following four quarters of decline, the downward curve levels off, despite the impending recession.”