By Daniel Hunter
Marketing budgets in the UK were revised sharply higher during the second quarter of 2013 as companies sought to take advantage of improving economic conditions by supporting sales efforts and new product launches.
With 22% of companies indicating an upward revision to their marketing budgets during the latest survey period, compared to 15% that indicated trimming, the resulting net balance of +7.3% was the highest since Q3 2007.
The positive showing for Q2 will bolster hopes that the sustained period of marketing cuts that have been evident since the financial crisis began will finally come to an end in 2013. The Bellwether survey has signalled annual declines in marketing budgets in each of the past five years, but with a strong upward revision recorded in Q2 the positive plans for 2013 signalled by the panel earlier in the year remain on track. A net balance of +13.5% of companies have pencilled in a net increase in marketing budgets during 2013 as a whole, the most upbeat forecast for two years.
The internet was again a key prop to the third successive quarterly upward revision to total marketing budgets. A net balance of +17.4% of companies indicated that internet related marketing budgets had been increased, a stark improvement on the previous quarter‟s +8.9% and the best reading since Q1 2010. Within internet advertising online search/SEO was revised up to the highest rate for a year-and-a-half (net balance: +13.7%).
A further four categories also registered upward revisions to budgets led by PR, a relatively recent addition to the survey, with the net balance of +3.4% the highest in three quarters of data collection. Sales promotion (+2.0%), main media advertising (+1.9%) and direct marketing (+0.6%) also recorded upward budget revisions. However, there were falls seen in "other‟ (-3.2%) and events (-0.9%).
“The second quarter is looking like one of the best we've seen since the onset of the financial crisis in terms of a positive signal for marketing budgets and the wider economy," Chris Williamson, Chief Economist at Markit and author of the Bellwether report, said.
“The latest Bellwether survey shows companies taking an increasingly aggressive stance with regard to boosting their marketing expenditure, which in turn reflects their' views on financial prospects having improved dramatically over the course of the year to date. Marketing spend looks set to rise in 2013 for the first time in six years as companies finally perceive a brightening business outlook at home and abroad.
“With marketing spend a key barometer of the health of the economy, not only is GDP growth likely to have accelerated in the second quarter, but the Office for Budget Responsibility's official forecast of 0.6% economic growth this year is all of a sudden starting to look overly pessimistic.”
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