UK: Trad Media Spend Dips, Online Ads Favored

British-FlagIn the UK, optimism is falling among business executives, since marketing budgets are essentially flat for the year ahead. But traditional media budgets are taking a hit. That’s according to the latest Bellwether Report issued today by the Institute for Practitioners of Advertising.

The Bellwether Report is researched and published by Markit Economics on behalf of the IPA. Chris Williamson, Chief Economist at Markit and author of the report, said the flat budget outlook for marketers probably reflects a similar stagnation of the overall economy.

"Looking deeper into the data, there are signs that companies have become increasingly reluctant to invest in traditional media campaigns. This reluctance reflects lower-than-expected sales and profits in recent months, as well as growing unease about the economic outlook.”



The report indicated that fourth-quarter 2011 budgets were up overall by less than 1% versus the year-ago period. The Q4 budget growth was down sharply from the previous quarter, when increases averaged 3.4% as marketers sought to protect market share, per the report.

Business optimism (rated on a scale where average is 0) was the lowest it has been in nearly three years, according to the report -- citing an overall rating of nearly -45%. Optimism was down sharply from Q3, when it hovered around -23%. In addition, executives reported that financial prospects for their own companies had deteriorated for the first time since the first quarter of 2009.

While marketing budgets may rise very slightly overall this year, the report concluded that traditional media budgets are being cut “in favor of online, price discounting and more direct marketing strategies.” 

IPA President Nicola Mendelsohn, who is also executive chairman and partner at ad shop Karmarama, stated that despite the gloomy outlook of the executives surveyed, budgets are holding up for now which  "shows that many companies remain committed to invest in marketing at present.”

The decline in optimism, Mendelsohn added, is yet another sign of “uncertainty for the year ahead.”

 The quarterly report surveys 300 UK marketing executives to get a snapshot of the health of the UK economy.

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