Advertisers cautiously optimistic for 2013, IPA survey finds

Bellwether survey by the Institute of Practitioners in Advertising reveals small rise in marketing budgets despite economic gloom

Concern over the health of the UK economy has led nervous marketers to raise their advertising budgets for 2013 by one of the smallest margins seen in almost 12 years, according to the latest survey by the Institute of Practitioners in Advertising.

The IPA’s quarterly Bellwether survey, which gauges the outlook of the UK marketing industry, found that in the final three months of 2012 marketers were confident their businesses would do well, while also being pessimistic about the health of the economy this year.

Marketing executives are cautiously optimistic about raising their budgets for 2013, albeit minimally, however this is often the case at the outset of each year as spend can be pegged back if necessary.

Almost 30% of marketing executives canvassed for the latest Bellwether survey also grew more optimistic about how well their businesses will do this year, the biggest proportion in nine months.

However, this optimism did not translate into confidence in the health in the wider economy and advertising industry.

Marketing executives were at their most pessimistic for a year, almost 30% were downbeat about the prospects of the ad industry in 2013, just 12% were more optimistic.

“The initial [marketing budget] increase is one of the smallest we have seen over the past 12 years,” said Chris Williamson, chief economist at Markit and author of the Bellwether report. “Companies remain cautious about raising expenditure on marketing activities due to weaker than expected sales and profits last year and ongoing uncertainty about the economic outlook at home and abroad.”

Marketers ended 2012 confidently with the biggest proportion increasing their ad budgets than has been seen since late 2011.

The six months to the end of September had seen budget cuts, with the IPA survey for the third quarter of 2012 recording the biggest declines in marketing spend since the 2009 recession.

However, the only media sector to see a significant increase in budget in the fourth quarter is digital marketing, with a slight rise for market research.

The budgets set for “main media” – which includes TV, press, outdoor, radio and cinema advertising – is flat.

Areas including PR, events, direct marketing and sales promotion have been cut by marketers.

“While we continue to operate amidst a difficult economic backdrop, we should nevertheless take encouragement from these figures, and do all that we can to remain positive in meeting the challenges we face,” said Nicola Mendelsohn, president of the IPA.

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