Following a year of stagnant spending, companies revised their total marketing budgets up on average by nearly 3% in Q1 2002 as advertisers shelled out more on direct marketing and online initiatives.
While budgets for direct marketing and internet advertising and sponsorship were revised upward by 5.6% and 0.8% respectively, those for ads, sales promotion and other marketing activities fell.
However, with 20.4% of companies reporting cuts to media adspend for a net drop of 2.8%, downward revisions to the category were the smallest since businesses began slashing media spend budgets in Q2 2000. This compares with cuts of 13.1% for Q4 2001 and 14.3% for Q3 2002.
Sales promotion budgets set in Q1 2002 took a net loss of 8.5%, while all other categories saw a net 1.8% drop.
Companies setting new marketing budgets in Q1 also reported an increase in their annual budgeted spend, with 41.9% raising it over the previous year's due to stronger sales and more confidence.
Coming on the heels of rosy forecasts for May television revenues and encouraging words from broadcasters, the survey of 200 marketing agencies seems to suggest that a recovery is under way.
"We are cautiously optimistic,
said IPA marketing director Hamish Pringle.
Separately, Zenith Optimedia issued a less optimistic report for 2002.
The media agency revised its previous forecast of a 0.7% decline in advertising in the world's seven biggest markets, downward to 1.9%.
COMMENT
The latest Bellwether Report from the IPA suggests that we may finally be seeing the light at the end of the tunnel.
After two years of deep cuts in marketing budgets, advertisers seem to be returning, however cautiously, to more robust spending levels. But with many still withholding spend amid continuing economic and political uncertainty, the media slump is not over yet.
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