During Q1, advertisers cut their overall marketing spend for the second quarter running according to the latest Institute of Practitioners in Advertising Bellwether Report.
According to Bellwether, 20% of companies cut their marketing budgets, and 19% reported an increase.
Chris Williamson of NTC Economics, which compiles the research on behalf of the IPA, says that the negative margin in terms of sentiment is small, but significant. “We think there’s worse to come,” he adds.
Among the sectors cutting their budgets: retail, FMCG, public sector, media and industrial and utilities.
Among those raising their budgets (according to MAD): financial services, travel and entertainment and consumer durables (Er, financial services — raising marketing spend? Really?)
The good news for Big Media is all relative.
1) Q1’s overall cuts in marketing spend were less deep than those that took place in Q4 of last year.
2) Spend on media advertising (including digital) seems to have got off lightly compared with PR, direct marketing, sponsorship and market research — all of which suffered deeper cuts than ad spend. (Note, however, that the resilience of “advertising” might be a bit of a chimera: apparently, the IPA has changed its classifications. It now lumps in buoyant online ad spend into the same “advertising” category that includes press and TV. )
From Marketing Week (sub reqd.):
Marketers’ confidence about the financial prospects for their industry has also plunged to a two-and-a-half year low, with just 14% more optimistic about prospects for their industry than they were three months ago, compared to 49% that were less optimistic.
From Media Week (registration reqd.):
In the first three months of this year, 19% of companies reported increased total marketing budgets, while 21% reported a decrease, giving a net balance of -2.1%.
And on those steep cuts below the line:
The sharpest cut to marketing budgets was seen in the “all other” category, which includes activities such as event sponsorship, PR and market research.
The “all other” category has undergone the steepest drop for two years, while direct marketing has had the largest fall in eight years and sales promotion the biggest decline for two years.
Footnote: The section of the Bellwether Report suggesting that financial services firms have increased their marketing spend must have been infected by gremlins. Or something.
More plausibly, Nielsen Media Research tells Marketing that UK’s Big Five retail banking groups have taken differing approaches to the the downturn. By way of an introduction, here’s the dramatic data on ad spend at Lloyds TSB:
So this particular bank cut its ad spend by an estimate 51% YOY during Q1. (The “estimate” bit is important: Nielson’s ad tracking numbers are compiled without insider help and should only be used as a rough guide to trends.)
In similar vein, Royal Bank of Scotland cut its spend by 56% to £1.9m. (It’s worth noting here that the size of budget was fairly small in the first place. . .)
The remaining three of the Big Five took a very different course. HSBC trimmed ad costs by just 7% to £6.6m. The remaining two of the UK’s Big Five retail banks increased their spend marginally. Barclays was up by 1.4%, and Halifax rose by 3%.
Despite these small rises, this amounts to a big collective cut in marketing investment.