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…