Budgets for all main categories of marketing spend were revised up in Q1 with the exception of main media ad spend, says the ICA Survey of Marketing Budgets, conducted for the Institute of Communications and Advertising by NTC Research. The study is based on quarterly information provided by a panel of 270 senior marketing executives in Canadian companies in Q1.
Main media ad spend was revised down slightly, having been left unchanged in Q4 and also revised down in Q3. Companies reported that weak profits, linked in turn to poor sales and high oil prices, had encouraged a further shift in the allocation of marketing spend away from main media advertising towards direct marketing and the Internet.
Despite being revised down in Q1, media ad spend is set to show the strongest growth of all main marketing categories covered by the survey in 2005-06, followed closely by sales promotions and then direct marketing.
Budgets for current marketing spend overall were revised up at the strongest rate since Q2 2004 with 19.4% reporting increases in budgets and only 12.9% reporting decreases, for a net gain of 6.5%. Growth of budgets was often linked to further sales growth, although the survey also showed an increase in the number of companies reporting that budgets had been boosted in order to improve weaker than expected profitability in recent months.
One in three (34.9%) companies reported that new budgets for 2005-06 have been set higher than actual spend in 2004-05 on average and well up on that recorded for new budget setting a year ago.
‘While the increases to marketing budgets show continued strength each quarter since we began this survey in 2003, it is also significant to note that companies reporting decreases in budgets has declined, suggesting a greater trust in Canada’s growing economy. For instance, only 10.9% of companies reported decreases in their marketing budgets for 2005, down from 22.0% in 2004,’ said Rupert Brendon, president & CEO of ICA in a release.
The survey panel was selected to represent all key business sectors and was drawn primarily from the nation’s top 1,000 companies. Going forward, the ICA Survey of Marketing Budgets will be published quarterly (January, April, July and October.) Subscriptions can be purchased from www.warc.com/ica.
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