U.K. Bellwether Report: Marketers Are Pessimistic About 2012

Publicis' Maurice Levy Confirms European Clients Are Scaling Back Marketing Plans

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Publicis Groupe , the third-largest global advertising group, said its European clients have scaled back marketing plans for 2012 as the region grapples with the prospects of a recession.

While there will still be growth this year, thanks to the London Olympics and the European soccer championships, companies are being more cautious, Publicis Chairman-CEO Maurice Levy said yesterday in an interview with Bloomberg News.

Maurice Levy
Maurice Levy Credit: Eric Dessons

"We are seeing some cuts based on the original spending intention, but still above the expenditure last year," Mr. Levy said. "So we will still have growth in Europe. There are obviously two very important events in 2012."

The findings by Publicis, whose clients include German carmaker BMW and Nestle, fit with what U.K. marketing executives said in the latest quarterly Bellwether report from the Institute of Practitioners in Advertising, the U.K.'s ad agency association. Marketers there are the most pessimistic they've been since the last recession, and plan slower growth in ad spending, according to the U.K. survey.

British companies ranked their business prospects for the first quarter of this year as the worst in 11 quarters and said their planned increases for ad spending in 2012 are weaker than in any recorded year before 2009, according to a survey of 300 marketers. Digital marketing has become the fastest-growing part of the U.K. advertising industry as companies look for ways to save money, according to the IPA report.

In the fourth quarter of 2011, Publicis' business was "less impacted than we thought" by the economic woes, Mr. Levy said.

"There are signs that companies have become increasingly reluctant to invest in traditional media campaigns, instead diverting money towards the internet and direct marketing," said Chris Williamson, chief economist at financial data company Markit and an author of the Bellwether report. "This reluctance reflects lower-than-expected sales and profits in recent months, as well as growing unease about the economic outlook."

Ad agency holding-companies such as Publicis, the owner of Leo Burnett and Saatchi & Saatchi; and WPP Group are combating slower growth with acquisitions. In 2011, the two companies bought digital agencies and marketers in emerging markets where growth remains strong.

WPP CEO Martin Sorrell this month said he expects revenue to grow 4% in 2012.

The outlook for 2012 didn't stop some businesses from increasing spending in the final months of 2011. More companies increased marketing budgets than cut them in the fourth quarter to protect sales from competitors, according to the report.

"It is encouraging to see that companies are planning to raise their marketing spend in 2012 despite seeing their financial prospects for the next three months falling to the worst since the height of the financial crisis," Mr. Williamson said. "Many companies are looking to fight the prospects of a challenging year ahead with increased promotional activity."

--Bloomberg News--

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