British companies continued to slash their advertising budgets in the first quarter of 2009 but the rate of decline, while still steep, eased compared with the record fourth quarter fall, according to a key report.
The Bellwether survey by the Institute of Practitioners in Advertising (IPA) said the slowing rate of decline suggested budget cutting, an indicator of economic weakness, could have reached its peak in the fourth quarter of 2008.
The IPA said the report correlated well with GDP trends and could bode well for the economy.
“This data supports the view that the bottom of the market has been reached,” said Moray MacLennan, IPA president and chairman of Europe M&C Saatchi.
“It will be a long road to full recovery, but this maybe the turning point. It’s good to see a graph going in the right direction for a change.”
Business confidence also recovered from the fourth quarter low, according to the survey. The proportion of companies reporting that prospects had deteriorated in the latest three months fell from 63 per cent in the fourth quarter to 44 per cent in the first quarter.
Those who said prospects had improved rose from five per cent to 14 per cent.
However, the report showed companies were still under cost pressures. Some 45 per cent of all companies surveyed had revised down their marketing budgets for the current financial year in the first quarter, exceeding the 11 per cent that reported an increase.
While the budget cut was weaker than the record decline seen in the fourth quarter of 2008, it was still the second steepest in the survey’s nine year history, it said.
For the first time since the report began, budgets for the 2009 financial year have been set lower than the actual marketing spend in 2008.
“The Bellwether raises hopes that a bottom was reached in Q4 and that the rate of budget cutting will ease as we move through 2009,” the report’s author Chris Williamson said.