Internet leads as ad budgets elsewhere remain weak

Internet advertising is continuing to show impressive growth as adspend elsewhere remains weak for the rest of the year, with an average of 6.5% of companies cutting their overall marketing spend, according to the latest Bellwether Report.

The figures, published by NTC Research on behalf of the IPA, show that although marketing growth is set to show an increase for 2005-2006 as a whole, there have been downward revisions to budgets over the past quarter. These have been blamed on disappointing sales and profits, linked to weaker consumer spending and high energy costs.

Budgets for Internet spend showed the strongest growth for any category, with 27% of companies surveyed saying they had spent more on Internet marketing in the third quarter, while only 3% said they had cut online marketing budgets.

The Bellwether Report says that Internet now accounts for around 4% of total marketing spend, up from under 2% five years ago.

John Owen, chairman IPA Digital Marketing Group and planning partner at Dare, said: "Online media continues to go from strength to strength as clients invest more on the back of tangible results."

Direct maketing also fared well, seeing a net balance rise of 6.2%.

The figures show that for TV, radio and press, 22% of companies cut their media adspend budgets for the fourth quarter, while only 16% increased them. The worst cuts were in the retail, FMCG, media, and IT and computing sectors.

The Bellwether Report suggests that as companies turn away from expensive traditional media, cheaper methods of marketing, such as direct marketing and online marketing, appear to benefit.

Sir Martin Sorrell, chief executive of WPP Group, said: "The Q3 Bellwether report confirms what we have been seeing in the UK, and indeed France and Germany -- clients spending cautiously overall, particularly in traditional media, and increasing spending in the direct, Internet and interactive media."

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