The Institute of Practitioners in Advertising, the U.K.'s agency association, issues a quarterly survey called the Bellwether Report that is based on marketers' online responses and has become a key indicator of the health of the U.K. marketing economy.
The latest Bellwether Report shows the greatest decline in ad budgets in the survey's nine-year history. This is the fourth consecutive quarter in which the country's top marketers have said they are cutting spending.
Budgets for traditional media have seen the sharpest downturn, with 26% of respondents saying they made cuts there. And even online ad spending is stagnating, with few marketers planning to increase their digital outlay. Sales promotion and direct-marketing budgets fared slightly better than traditional media.
Chris Williamson, chief economist at Markit and author of the Bellwether Report, said, "The slump in marketing budgets indicates a severe worsening of business confidence and the rising impact of the credit crunch on the real economy, as companies rein in spending in the face of poor sales and growing fears over the economy."
Few are spending more
Only 12% of respondents said their companies revised marketing budgets upward for the third quarter.
IPA President Moray MacLennan said, "I doubt these gloomy results will come as a surprise to anyone. The industry will be watching the next set of results with great interest hoping that the downward curve levels off."
Respondents attributed the budget cuts to lower-than-anticipated sales and profits, reflecting weaker consumer and corporate demand, as well as growing concerns about the economy.
Optimism hard to find
Only 8% of respondents said they were more optimistic about prospects for their industry than they were three months ago, while 69%, not surprisingly, said they were less optimistic.
The Bellwether Report uses data collected mostly by e-mail from a panel of about 250 top U.K. marketers, representing all key business sectors and drawn from the nation's top 1,000 companies.