The latest IPA and BDO Bellwether report has revealed that almost a quarter of UK marketers reduced their budgets in the last quarter of 2010.

Of 300 companies surveyed, from the country’s top 1000, 22% of marketers reported a reduction in their budget towards the end of 2010, against just 17% who said they were increasing their investment.

Confidence dipped to the lowest point in 18 months as marketers grew pessimistic about the financial outlook for their companies and industries. The net balance dipped to 10.8 from 15.8 in the third quarter of the year. However, budgets have been set higher for the coming year.

Direct marketing, internet advertising and paid search were the only disciplines to see a rise in spend during the period, albeit at a slower rate. The report suggests that this is due to marketers looking for methods with more “predictable return” on investment, fuelling growth for these channels.

In contrast, budgets were revised down across sales promotion, main media and all other marketing, including PR and events.

Commenting on the Bellwether report, Rory Sutherland, IPA president and vice-chairman of the Ogilvy Group UK, says;

“That these latest figures reveal a decline in confidence is disappointing, but characteristic of the uncertain climate we find ourselves in.

At least we can draw comfort from those companies which reported an increase in spending in the last quarter of the year, and from indications that initial budget setting for 2011 is currently higher than actual 2010 spend.”

Andy Viner, head of media at BDO LLP, adds:

“We expect corporates to keep their marketing spend both flexible and cautious as they keep a sharp eye on consumer behaviour and wider economic indicators which is unsurprising given the backdrop of continued public spending cuts and the threat of rising interest rates.”

report

To download the report in full, please visit www.ipa.co.uk/Content/IPABDO-Bellwether-Report.