Online Feels Pinch As U.K. Ad Budgets Continue Fall

U.K. advertisers substantially reduced their budgets in the final three months of 2008 according to the IPA's Q4 Bellwether report, published today. Just 7 percent of the companies questioned reported an increase in overall Q4 ad budgets, while 49 percent said they had cut spending during that period.

Even online ad spend -- which managed to avoid reduction in Q3 -- began to suffer, with around 7 percent of companies reporting a drop in spending in the fourth quarter. However online experienced less of a reduction than any other medium, suggesting further growth in overall market share, which the IPA now estimates at 10 percent. Hardest hit in the fourth quarter were budgets for "main media advertising," which includes TV, radio and press.

Moray MacLennan, IPA President and CEO of M&C Saatchi Worldwide, also predicted the U.K. advertising market would be "no place for the faint hearted" in 2009, with 45 percent of companies cutting overall ad budgets next year, and just 20 percent expecting an increase in spend.

Three quarters of the companies surveyed said they believed the financial situation had deteriorated during the final three months of the year, and 63 percent of the executives questioned reported pessimism for their own companies' financial prospects.

Chris Williamson, the report author and chief economist at financial information firm Markit, stated in a press release, "The Bellwether report shows an alarming rate of corporate retrenchment as the recession deepens. Disappointing sales in all sectors have also led companies to cut budgets for the year ahead for the first time since the survey began, suggesting there will be no quick return to growth for marketing spend."