News: SP takes larger slice of marketers’ spend

Sales promotion fared better than nearly all other areas of marketing and advertising in today’s quarterly Bellwether Report, leading to it accounting for a larger share of marketers’ spend.

The survey found that, in the last quarter, annual marketing budgets were revised down to the greatest extent ever recorded in the survey’s nine-year history, with main media advertising one of the hardest hit.

Although budgets for sales promotion were revised down for July to September, they fared “slightly better” than other categories, the report’s author Chris Williamson said, which meant that it accounted for “an increased share of total marketing spend”.

The survey reported that budgets for direct marketing – a key channel for promotions – had also suffered less than other areas except sales promotion and digital.

Annual expenditure on internet advertising – a medium increasingly used for promotions – held steady in the last quarter, but this contrasted with the robust growth seen in previous quarters.

Overall, 12 per cent of companies still reported an upward revision in annual marketing budgets, but 35 per cent reported revisions downward.

Companies attributed the cutting of budgets to lower-than-anticipated sales and profits, in turn reflecting weaker consumer and corporate demand as well as growing concerns about the economy.

The Bellwether Report is carried out by research company Markit Economics on behalf of the Institute of Practitioners in Advertising.

Chris Williamson, chief economist at Markit and author of the report, said: “The slump in the Bellwether marketing budget and financial prospects data indicates a severe worsening of business confidence and the rising impact of the credit crunch on the real economy, as companies rein in spending in the face of poor sales and growing fears over the economy.

“Sales promotion budgets were cut for the third quarter running in Q3 although the decline was less steep than seen in the previous two quarters and well below the rate of decline seen for total marketing budgets.

“This therefore points to sales promotion accounting for an increased share of total marketing spend, reflecting a movement away from advertising towards discounting and other price-based incentives where price competition has become an important aspect of fighting weak demand.”