The publication of the Q3 2003 Bellwether Report has unveiled a glimmer of hope for the advertising industry announcing that, although advertising budgets are still not rising significantly, the decline in marketing spend is slowing, indicating a possible turnaround and renewed optimism by advertisers and agencies alike.
The results of the report stated that adspend budgets were cut for the 11th consecutive quarter during Q3. However, although budgets are still being squeezed, they had showed the smallest downward revision since Q2 2002. The report also confirmed that the long-term lack of confidence expected to be shown by advertisers in the wake of the Iraq war was much less than anticipated and had not particularly caused advertisers to slash their marketing spend.
Upward trends were recorded for public sector, automobile and industrial advertising, but, in contrast, the steepest downward revisions were recorded for FMCG, IT/computing and consumer durables.
While retail and FMCG showed the steepest downward revisions in advertising budgets, car manufacturers and public sector advertisers all showed strong increases in spend in Q3 in comparison to Q2.
Further positive news was announced by the Advertising Association in its Long Term Advertising Expenditure Forecast.
The report predicts that advertising expenditure will rise by up to 42% over the 10 years to 2013.
Industry reaction to the news was cautious. Antony Young, chief executive of Zenith Optimedia, said: "I think what we're seeing is that clients are being more proactive about how they're planning their budgets.
"No clients are increasing their budgets generally, but they're much more focused on driving their business. There are a lot more dedicated choices and options now, and that's being fed back into the marketing process.
"We're putting a lot more initiatives in place to enhance the client's budget.
"So there is some truth in the reports, as far as our clients are concerned, they are not significantly increasing budgets but also we're not seeing huge decreases in ad spend."
Sir Martin Sorrell, chief executive of the WPP Group, said: "WPP's experience reflects the IPA Bellwether Report. The UK remains our toughest market, although the rate of decline is slowing and the prospects for 2004 look better."
IPA president Stephen Woodford said: "We're very encouraged by this report, especially since the previous two years' Q3 results seemed to suggest that we should probably expect a severe adjustment downward as companies prepare their figures for year end.
"It also tied in with the recent CAF Barometer findings which reported an increase in new business activity and an increased commitment in communication budgets."