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Firms reduce ad spending

COMPANIES continued to reduce their advertising budgets in the final quarter of 2009, although most expect to increase spending this year.

The latest bellwether survey, published today by the Institute of Practitioners in Advertising (IPA) and accountancy firm BDO, found that 25 per cent of companies reduced their marketing spend in the three months to the end of December.

Just 18 per cent of companies surveyed said they had increased their advertising budgets.

But the net balance of -7 per cent, compared to -15 per cent in the third quarter, was the most positive reading since early 2008 and much higher than the record lows seen at the beginning of last year.

And preliminary data shows that companies are planning to increase their marketing spend in 2010.

The online advertising market continued to grow, with a net balance of 11.5 per cent reporting an increase in spending on internet search marketing.

Unsurprisingly, traditional media continued to perform badly with a net balance of 6.9 per cent saying they had reduced spending on radio, television and press advertising.

IPA‚Äąpresident and vice-chairman of Ogilvy said: “This latest report also seems to bring particularly good news for direct and digital marketing activities, which seem to be leading the recovery.”