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Online Suffers as UK Advertising Budgets Continue to Fall




By Peter Young

According to the IPA’s Bellwether report, UK advertisers substantially reduced their budgets in the final 3 months of 2008, with just 7% of respondents saying they had increased budgets during the final quarter of 2008. That was in stark contrast to the 49% who reported that they had cut their marketing spend during the same period. It was also the fifth successive quarterly reduction in spend, with initial forecasts suggesting 2009 is set to see further cuts.

One of the most noticeable statistics to come from the report however was that online advertising spend—which had managed to escape the downward trend in Q3 2008—started to see a decline with 7% of organisations reporting a reduction in spend for the following quarter (Q4). It should however be caveated with the fact that online was affected less than any other channel, indicative of further growth in terms of overall UK market share—according to IPA estimates now around 10% of total advertising spend.

Traditional advertising channels continued to suffer in Q4 with ‘main media channels’, which includes TV, Radio and Press all seeing reductions in spend during the final quarter of last year. This is not something that many leading experts expect to see change in the short term with 45 percent of companies cutting overall ad budgets next year, and just 20 percent expecting an increase in spend.

Much of the reductions in spend can be attributed to widespread caution with nearly three quarters of the companies surveyed saying that they believed the financial situation had deteriorated during the final three months of the year, with 63% going on to say they weren’t positive for their own companies’ financial prospects.

Chris Williamson, the author of the report highlighted:

The Bellwether report shows an alarming rate of corporate retrenchment as the recession deepens. Disappointing sales in all sectors have also led companies to cut budgets for the year ahead for the first time since the survey began, suggesting there will be no quick return to growth for marketing spend.

I think IPA President and CEO of M&C Saatchi Worldwide, Moray MacLennan puts forecasts for 2009 best saying that the UK advertising market is going to be “no place for the faint hearted”. It is however (from a purely digital perspective), encouraging to see the continued take-up of digital as part of the greater marketing mix.

Moving forward could we look back at 2009/10 as the years where digital marketing really came of age…

Peter Young is a UK Search Marketing Professional who contributes regularly to the Holistic Search site whilst working as SEO Manager at MediaVest in Manchester, England.

  • http://www.dan-london.com Dan London

    I think some companies (at least the smart ones) are looking at what advertising brings in the best ROI and focusing on those mediums. No longer will we see huge blow-out ad campaigns, but more targeted, smaller campaigns where ROI can be easily shown.

    Dan London’s last blog post..Don’t Judge a Person by Their Twitter Profile

  • http://www.greatpriceshere.com Nicole Price

    I totally agree. In retrospect, we will see this year as the turn around point for digital advertising. So, let us not be faint-hearted!

    Nicole Price’s last blog post..Good Deals on Hair Products

  • http://www.brianchappell.com Brian Chappell

    Now is a time to ramp up your spend and crush your competition. People who cut back digital spend have no idea what they are doing.

    Brian Chappell’s last blog post..IM Survey: How many domains do you work with?

  • http://www.rnbhaven.com R&B Love Songs

    I’m sure all of advertising was cut, it’s not too surprising honestly. When you’re losing money, you need to cut costs everywhere. It will likely come back as they see that the Internet cna be a cheaper outlet but it will take time.

  • http://www.jordankasteler.com/utah-seo-pro-blog/ Utah SEO Pro

    Sounds like it’s survival of the fittest now.

    Utah SEO Pro’s last blog post..An Interview with Utah SEO Pro (Jordan Kasteler) by Martin Bowling

  • http://www.dataflurry.com DF Marketing SEO

    The whole world is hurting. Companies simply don’t have those massive “plump” budgets they had previously!

  • http://quilmesverano.tv Quilmes Verano

    Let’s just hope all this passes by quickly. :S

  • http://www.velvetblues.com Shirley

    Wow. Well, this is definitely going to hurt big ad networks and websites/blog networks that get their revenue from advertising…

    Shirley’s last blog post..Why Are Bloggers Writing Shorter And Shorter Posts?

  • http://www.posicionamientovalencia.com Carlos

    Only imagination can save me.

  • http://pixelres.com pixelres

    We’ve definitely seen a big slowdown in digital briefs coming in since early December, but for digital media owners and publishers we are starting to see things picking up again after Christmas only now. The reduction in spend shouldn’t be as much as in traditional media, but we’ve found we have to work harder, smarter and longer hours to win the same business.

    pixelres’s last blog post..Cristiana Couceiro