UK firms ramp up ad budgets, but online growth slows

LONDON Wed Jan 15, 2014 7:01pm EST

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LONDON Jan 16 (Reuters) - British companies raised their marketing budgets for the fifth consecutive quarter in the final months of last year, reflecting growing optimism about the economy, an industry survey showed on Thursday.

The IPA Bellwether report said a net balance of 11 percent registered an increase in advertising budgets in the fourth quarter, making it the second biggest revision of spending since the survey began at the start of 2000.

The numbers add to recent signs of improving macro-economic data last week which showed the economy grew last year at its fastest pace since 2007 despite a slight slowdown in growth in the final three months.

The report also found that around 25 percent of companies were expecting to see growth in 2014, the highest reading since 2008.

"With the current run of growth in marketing budgets now extending to five quarters, it seems companies are spending again to drive business growth," said IPA Director General Paul Bansfair. "Confidence remains high as the economic situation continues to improve, this is encouraging to hear and welcome news."

Companies are continuing to increase their marketing spend towards internet advertising, with a net balance of 9.2 percent. However the survey reported this was the lowest recorded rate of growth since Q1 2013.

"It's a bit of surprise to see it coming down but also what we are seeing over the year is more money being pumped into traditional main media," said Markit economist Chris Williamson, who wrote the report.

He said companies were advertising to drive their online sales, but the ads were placed in traditional media as well as on the Internet itself. Budgets for traditional media remained unchanged in the fourth quarter but net reductions were seen in PR, market research and other paid-for marketing activity.

The IPA Bellwether report was drawn up from a survey of 300 companies based in Britain.

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