Budgets Increase, but U.K. Advertising Industry Gloom Continues

3:59 AM PST 10/13/2011 by Ralf Ludemann

Business confidence among U.K. marketing executives has plummeted, according to Institute of Practitioners in Advertising.

LONDON - Business confidence among U.K. marketing executives has plummeted to levels not seen since the recession more than two years ago, according to The Guardian.

Fears over the outlook for the economy have worsened, according to the latest Bellwether survey.

But, despite the negative outlook, U.K. marketing executives did raise their budgets in the three months to the end of September, ending three consecutive quarters of budget cutting.

The report, jointly produced by the Institute of Practitioners in Advertising, found that more than double the number of marketing executives have adopted a negative outlook on the prospects for the ad industry in the third quarter compared with the previous three months.

Almost 40 percent of respondents said they believe the situation is likely to worsen. Just 16 percent were positive on the financial outlook for the ad and marketing industry.

It represents a level of gloom not seen since the first quarter of 2009 when the U.K. was struggling to recover from a recession, the Guardian said.

Despite the gloom, marketers have been increasing advertising budgets. The report ascribes the change in strategy by U.K. marketers as a move to "promote new products and maintain market share amid strong competitive pressures."

Nicola Mendelsohn, president of the IPA, said the budget rises show that many companies "understand that those that maintain the strongest marketing spend will come out on top."

"That we are seeing a further decline in confidence overall continues to reflect the uncertain financial climate that businesses are operating in. This rise in spend demonstrates that many companies are trying to buck the downward trend," she said.

In terms of the different types of media, it is the first time since the second quarter of 2007 that marketers have increased spend across all categories. 

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