More than half of the companies surveyed for the report said that marketing budgets for 2004 were higher than last year, with around one in five saying they would set lower budgets.
The Bellwether Report, published quarterly by the IPA based on research by NTC Research, says that the outlook is the most buoyant since 2000 and shows real recovery for the advertising industry.
Chris Williamson, author of the report, said: "Marketing and advertising executives are entering 2004 in the most optimistic mood since the height of the dotcom boom."
He said that growth was being driven by rising profits rather than simply because of business confidence.
Sir Martin Sorrell, chief executive of WPP Group, said that the trends were not surprising given a 25% rise in US corporate earnings in the last quarter of 2003.
"Corporate profitability is improving but up to now mainly as a result of cost reductions. Perhaps now the focus is switching to top-line growth and advertising and marketing services spending is rising as a result," he said.
Sir Martin has long been predicting a recovery in 2004, citing the Athens Olympics, European football championships and US Presidential elections as contributing factors.
Traditional media looks set to benefit from the increased optimism after a year where there was no real growth. The survey found that 40% of companies had budgeted higher adspend than in 2003, almost twice the number that reported a decline.
Direct marketing continues to perform strongly, with budgets rising by a greater amount than at any time since the second quarter of 2002. Internet adspend was also up, with the last quarter of 2003 its best since 2002.
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