UK advertising budgets cut in Q4 - report

LONDON, Jan 14 (Reuters) - UK advertising budgets were revised down for the first time in a year in the fourth quarter of 2007, marking the steepest fall in nearly two years, a key report showed on Monday.

The Bellwether Report by the Institute of Practitioners in Advertising said weaker-than-expected sales revenues, disappointing profits and concerns about the economic environment resulted in companies trimming ad budgets.

It said main media advertising saw the largest cut to budgets, with traditional media such as television and press hit particularly hard, although it said almost half of all companies had set their 2008 budgets higher than their 2007 actual spend.

Internet budgets were increased up to a greater extent than any other category and now account for around 9 percent of total marketing spend, but the rise was the weakest since the third quarter in 2003.

By sector, reductions to budgets were most common in fast- moving consumer goods, financial services, auto and industrial sectors while budget increases continued in IT and computing, retail, travel and entertainment.

"The Bellwether survey reveals a marked deterioration in business conditions in the fourth quarter of last year, which companies responded to by trimming their marketing budgets causing 2007 to finish on the weakest note for two years," Bellwether author Chris Williamson said.

"Some positive news was provided by 2008 marketing budgets being set higher than actual spend in 2007, but we interpret this with caution.

"Companies will be monitoring the business situation carefully and, if trading conditions and business confidence fail to pick up in the New Year, we can expect these budgets to be revised down as the year proceeds."

The Bellwether Report is based on a survey of 250 companies, representing all key business sectors.

(Reporting by Kate Holton; Editing by Erica Billingham)