A significant number of marketers are cutting their budgets in the U.K. for the fifth consecutive year, according to a new report from the Institute of Practitioners in Advertising.
The IPA's Bellwether report, which tracks the budget plans of 300 of the U.K.'s top marketers, shows that during the third quarter of 2012, 23% of companies reduced their spending forecasts for the next year. Only 18% plan to increase spending, with the rest keeping forecasts unchanged. For the Bellwether report, marketers are asked every quarter about their plans for the next 12 months.
IPA President Nicola Mendelsohn said in a statement, "The message ... is one of underlying stagnation. We had hoped when the year started that things were picking up, but as time has gone on the economy has stuttered and confidence isn't particularly strong."
Despite major events this year in the U.K. such as the London Olympics and the Queen's Diamond Jubilee, general business optimism has ebbed, according to the report. The slowdown in the global economy and a failure to resolve the Eurozone sovereign debt crisis were highlighted as the key factors contributing to the gloomy outlook.
Only internet advertising is likely to receive increased budgets in the coming year, with spending growing by about 6%. Budgets for TV, print, radio and cinema were revised downward by 6.4% for the year ahead. The biggest cuts planned for the next 12 months, according to marketers, will be in PR, events and direct marketing, all forecast to be down 16% budget cut over the coming year.
Chris Williamson, chief economist at business survey specialist Markit Economics and author of the Bellwether report issued quarterly in the U.K., said, "Disappointing sales and revenues prompted companies to cut their marketing budgets again in the third quarter, reflecting the weaker than expected economic environment than many had hoped to be operating in."
Separately, ZenithOptimedia this week cited Eurozone weakness as the reason for cutting its global forecast for advertising growth in 2012 to 3.8% from an earlier forecast in June 2012. of 4.3% growth. The company said it expects advertising in the Eurozone to drop by 3.1% this year, rather than the 1.1% slump forecast in June. ZenithOptimedia said it expects it expects growth in the region to resume slowly, reaching 0.9% in 2013 and 2.3% in 2014 "assuming the Eurozone remains intact."