Budget cutting by marketing departments is continuing to slow down, according to the latest Institute of Practitioners in Advertising/BDO Bellwether survey – and, with the exception of online media, sales promotion appears to be recovering fastest from the recession.

Sales promotion had the lowest rate of fall in budgets of any of the non-digital media that the IPA/BDO study tracks, at -4.7. That compares with direct marketing on -5.5, media advertising on -10.4 and ‘all others’ (including sponsorship and PR) on -24.4.

Clive Mishon, chairman of the ISP, says that while the ISP has some concerns over the Bellwether’s definition of sales promotion, “it is good to see that the decline in budgets in our industry is the lowest of all the ‘off-line’ disciplines. We would argue, however, that sales promotion is not a channel, as the IPA categorises it, but rather behaviour-changing content which can be communicated through channels such as direct marketing, above-the-line advertising and even online.”

Jim Houghton, head of marketing services at BDO says: “It will come as a great relief to the industry that the economic pressures seem to be easing. Evidently this relief won't be uniform, with online and sales-focused marketing disciplines the strongest.”

The Bellwether found that only online advertising, including internet search, saw any growth in budgets in the third quarter of 2009. The index for all online advertising was +4.5, with the index for internet search slightly higher at +5.4.

The index for all media channels averaged out at -15.3.

The -4.7 index for sales promotion in Q3 2009 is also a major improvement on the second quarter, when the index was -8.8, which in turn was much better than the first quarter’s -13.7.

The slowing down in the rate of budget-cutting is in line with industry analysis. Many experts are predicting that marketing expenditure will stabilize by the end of 2009, is likely to remain flat for the first quarter and should then start to make a recovery from the second quarter of 2010.

The index is calculated by comparing the percentage of marketers who said they had increased their budgets in the various areas with the percentage who said they had cut spend.

The IPA says that although marketing spend fell for the eighth quarter running in Q3, the reduction in budgets was the smallest in over a year, and was linked to a strong rebound in business confidence – 47% of companies surveyed are seeing improved prospects, consistent with the economy returning to growth.


The Bellwether is compiled for the IPA and BDO by research company Markit.