Marketing budgets rise in UK but caution is advised

There has been continued growth in marketing spend in the UK, according to the latest Bellwether Report, but there are fears that the credit crisis could lead to a cut in budgets.

According to the report, which is based on marketing budgets at UK client companies, in the third quarter of 2007 just under 24% of companies reported increased marketing spend, and 15% reported a decrease, leaving a positive balance of 8.3%.

Despite the rises, the report found that there were signs of budgets being trimmed, notably from financial service providers and the automobile sector.

Chris Williamson, author of the Bellwether Report, said: "It will no doubt take some time for the full effects of the banking crisis to be felt, so it is likely that these strong Q3 numbers represent a peak in the cycle."

Sir Martin Sorrell, chief executive of the WPP Group, said that it was "too early to call what impact the liquidity crisis has had, or will have, on advertising and marketing services spending".

There was good news for what the Bellwether describes as "main media advertising" -- spend on television, press, radio, cinema, the internet and outdoor. It showed an overall balance of companies reporting an increase in budgets for the third quarter of 9.2%, which is the biggest in the report's history.

In below-the-line media, sales promotions budgets also saw record increases, up by 5.3%. The disciplines categorised as "all other marketing", including PR, event sponsorship and exhibitions, rose by 9.8%.

The only medium where budgets were cut was direct marketing, which experienced a 0.5% decline.

Among the ad industry comments, was a call from Aegis to retain a positive outlook.

Robert Lerwill, CEO of Aegis Group, said: "Q3 2007 has seen another robust rise in marketing budgets, in spite of the 'credit squeeze', and 2007 is still on track to break records. The UK market remains healthy, and we should resist the urge to talk gloomy rhetoric into a reality."

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

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