Marketing cutbacks worst since 9/11

LONDON - Marketing budgets have suffered the most dramatic decline since the 9/11 terrorist attacks in 2001, according to the latest edition of the IPA Bellwether Report.

The report cited disappointing sales, rising costs and a worsening economic outlook as reasons for cuts to budgets in the second quarter of 2008.

In total, 15% of companies reported an increase in their quarterly marketing budgets, compared with 27% which reported a decline.

The report's author, Chris Williamson, said that the decline 'raises the possibility that marketing spend could fall this year for the first time since the survey began in 2000'.

He added that even internet marketing was not immune; it returned the smallest increase in spend for five years.

Third-quarter marketing budgets have been revised downward for all channels except digital.

However, growth in digital marketing has slowed, with only 19% of those questioned reporting increases in internet budgets, down from 27% in the first quarter. A decline was reported by 12%, up from 5% in the first quarter.

Growth of internet search budgets also slowed in the second quarter, with 18% of companies increasing spend and 9% decreasing it.

Direct marketing suffered its hardest hit in the survey's history. Overall, 19% of companies reported a lowering of their spend on the medium, representing the biggest sustained decline of any channel.

Marketing budgets for traditional media, including TV, press, outdoor, radio and cinema, fared better, although they did fall at their fastest rate in more than two years. Overall, 11% of companies revised their media budgets upward; 27% reduced them.

Budgetary reductions occurred most frequently in the travel and entertainment, retail, durable consumer goods and FMCG sectors. However, marketing spend has risen in the government and charities, IT and computing and financial services sectors.

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