By Daniel Hunter

UK small to medium sized enterprises (SMEs) are more confident about their prospects for growth in the next 12 months than their larger counterparts, according to a major new survey of marketing professionals.

The Marketing Confidence Monitor, run by The Chartered Institute of Marketing (CIM) and supported by Deloitte and Forbes, found small and medium sized companies are planning strong investment and expecting increases in headcount in the coming year.

Larger companies, by contrast, are setting cautious growth targets, reining in marketing budgets and expecting reductions in staff numbers.

CIM’s new study, which will be repeated quarterly, produced an overall confidence score of +4.12, on a scale of +/-100, indicating some cautious optimism amid widespread uncertainty about the next 12 months. The index, produced from a weighted representative survey of more than 1,200 UK marketing professionals, will add to the debate over whether the UK is heading for a possible ‘triple-dip’ recession in 2013.

Despite general agreement that macro-economic conditions in the UK have stagnated or worsened in the last 12 months, respondents have mixed expectations for the coming year: businesses were split equally between expressing reduced confidence compared with this time last year (30 per cent), similar confidence (30 per cent) and increased confidence (29 per cent).

The study found marked differences between SMEs and larger companies. Almost a third of micro (31 per cent) and small (33 per cent) businesses anticipate an increase in marketing spend in the next year, but 40 per cent of mid-sized and 44 per cent of large companies expect a cut in budgets.

In addition, a quarter of large companies are expecting to cut their marketing headcount in the next fiscal period. By contrast, the same proportion (26 per cent) of small businesses are expecting to hire new marketing staff.

Overall, small organisations were more confident than large companies that their business could meet its financial and growth targets: 45 per cent of micro businesses and 38 per cent of small businesses were more confident this year than last year, while almost a third (29 per cent) of mid-sized and a quarter (25 per cent) of large companies expressed declining confidence.

The index also reveals particularly high confidence from marketers in the manufacturing and construction industry, and low confidence in the banking and financial services sector. Manufacturing and construction outperformed the UK average index for confidence in levels of marketing investment by 15 points, while banking and financial services fell four index points below the UK average on the same measure.

In the overall confidence index, manufacturing and construction scored 9 index points above the UK average. Almost a quarter (23 per cent) of manufacturing and construction companies are anticipating an increase in marketing headcount in the next 12 months, but almost a third (30 per cent) of banks and financial services firms anticipate job losses.

“Marketing plays a crucial role in driving growth and performance, and marketers are uniquely positioned between the business and the customer," Anne Godfrey, CEO of CIM, said.

"They understand how consumer confidence and business sentiment interact, and our study shows that times are clearly still very tough.

“It’s encouraging to see that small businesses are pressing forward with marketing investment and jobs - critical for fuelling growth - but it’s worrying that so many large companies are still expressing such uncertainty. We’ll be updating our confidence index every three months, so we’ll be able to track whether that uncertainty translates into a ‘triple-dip’ recession or the beginnings of a real recovery.”

Nick Turner, Partner and Marketing & Insight Practice Lead at Deloitte, said: “The view of the marketing community on business confidence is particularly enlightening given it is this group that are charged with fuelling economic growth.

"It’s fair to say that the neutral overall confidence score is in itself not that surprising. However, if you dig a little deeper, the underlying sentiment within different industry sectors varies significantly. Of particular interest was the positivity shared amongst the manufacturing and construction industries that are so important for UK exports and our trade balance. This insight was perhaps the most unexpected of wave one and we look forward to seeing if the trend continues in next quarter’s update.”

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