Internet adspend growth hit by economic slowdown

Growth in internet adspend appears to be falling off, with the smallest upward revision to online marketing budgets since the autumn of 2003, according to the latest Bellwether Report.

The report, published by the IPA, looks at what companies have spent on marketing and their forecast budgets. It shows that in the final quarter of 2007 there was a net upward revision of 16%, but that this was the lowest figure since the third quarter of 2003.

Wayne Arnold, European chief executive of digital agency Profero and chairman of IPA Digital, said: "The fact that it was the lowest level growth since Q3 2003 illustrates the positive reality that the internet is now core to many clients' marketing needs so unfortunately not entirely immune to the current economic environment."

This Bellwether Report also marks the first time that search advertising spend has been monitored. It found a similar pattern of budget revisions to total internet advertising, with 23% of companies increasing spend, compared with 7% making cuts.

Across all main media spend including internet, the report found budgets for the fourth quarter down for the first time in a year, and that it was in the steepest decline for nearly two years. It blamed weaker than expected sales revenues, disappointing profits and concerns about the economic environment.

Maurice Levy, chairman and CEO of Publicis Groupe, managed to find the silver lining in the findings: "It looks like that despite a gloomy Q4, we can expect a better 2008, probably thanks to the

Euro Cup and the Olympic Games. There is undoubtedly some turbulence in our old countries of Europe and, for our industry, we know that we find growth in digital and emerging markets."

The Bellwether Report is compiled quarterly by NTC Economics on behalf of the Institute of Practitioners in Advertising.

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