Report: U.K. Advertisers Plan to Pare Budgets in '09

Projected Spending Lower Than in Previous Year for First Time in IPA Survey's History

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LONDON (AdAge.com) -- The U.K. advertising industry will be "no place for the faint-hearted" in 2009, according to the Institute of Practitioners in Advertising's latest Bellwether Report.

The quarterly report by the U.K.'s ad-agency association, which looks at budget-setting by 250 of the top 1,000 marketers in the U.K., found for the first time in the report's nine-year history that annual marketing budgets are expected to be lower than in the previous year. For 2009, 45% of marketers surveyed said they plan to spend less than in 2008, more than double the 20% that said they plan to spend more. The remaining 35% of respondents said their 2009 budgets would remain the same.

"This Bellwether Report suggests that Adland in 2009 will be no place for the faint-hearted. Confidence has plummeted, and the data suggests a steep decline in GDP for Q1," said Moray MacLennan, IPA president and worldwide CEO of M&C Saatchi.

Concern about the economy
Budgets are down because sales revenue is expected to fall and because of general concern about the economy. In fact, 75% of marketers surveyed said they believe that the financial prospects facing their industries have deteriorated compared with three months ago.

"Nevertheless, given that marketing and creativity are the solution and not the problem, it will be interesting to see when the investment community starts to look favorably on those who maintain budgets and increase share of voice, as they are more likely to succeed in the future," Mr. MacLennan said.

Internet advertising already suffered a record reduction in budgets in the fourth quarter of 2008, although the rate of decline, about 5%, was the slowest among all media categories. Above-the-line media suffered the worst cuts, at around 32%.

"The survey shows an alarming rate of corporate retrenchment as the recession deepens, with spending on marketing being cut at a rate far greater than ever previously seen over the survey's nine-year history," said Chris Williamson, chief economist at Markit and author of the Bellwether Report. "Disappointing sales in all sectors have also led companies to cut budgets for the year ahead for the first time since the survey began, suggesting there will be no quick return to growth for marketing" spending.

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