Media News: Traditional media lose share

The migration of marketing spend from traditional media to online and direct marketing shows no sign of abating, according to the latest Bellwether Report from the Institute of Practitioners in Advertising (IPA).

The automotive, media, FMCG and retail sectors posted the most pronounced downgrades in traditional media spend in the third quarter of 2006, although the public sector and travel and entertainment categories showed increases.

The report claimed that the lower overall spend was linked to advertisers' concerns over return on investment. It added that the outlook remains weak for the rest of 2006, with a year-on-year fall in spend likely.

The decline in traditional media was matched by sharp rises in internet-related marketing spend. Budgets in this sector outperformed all others, with 24.1% of companies hiking their spend.

The proportion of companies allocating more than 15% of marketing budgets to the internet exceeded 15%, more than double the figure in 2000, when the first Bellwether Report was produced. The proportion allocating less than 1% of their spend to online fell from 75% to less than half.

Direct marketing also performed strongly, with 21% of companies having increased their budgets, compared with 11% which reduced them. Upward revisions were attributed to product launches and the measurable success of previous campaigns.

Overall, there was a modest upward revision across all marketing budgets; 22% of firms reported an increase is spend, compared with 19% that posted a decline.

This is the first net upturn in budgets since the first quarter of 2005. The IPA has attributed the rise to improved sales and profits, suggesting an improvement in economic growth.

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