Growth of marketing spend slow down after a strong 2004 for the advertising industry. By Kevin MayDate Submitted: 4/19/2005

The rise in global oil prices had particularly affected advertisers connected to the industrial and travel sectors, leading the latest Bellwether Report for the first quarter of 2005 to predict the weakest period of growth across the industry for three years.

Despite the gradual slowing of growth across the industry as a whole, marketing budgets have been revised up continuously since the last quarter of 2003.

But today’s new Bellwether Report, which is produced for the Institute of Practitioners in Advertising and is considered by many in the industry as the leading analytical tool for tracking industry trends, once again singled out online and direct marketing as key areas of growth.

Marketing budgets for both areas of the media were revised up during the period January to March 2005, while every other sector was revised down.

The report said during the last 12 months online advertising had continued its solid growth of recent years, with the number of companies that spend at least 10% of its marketing budget online increasing from 11% to 13% from the first quarter of 2004 to the same period in 2005.

Martin Sorrell, chief executive of WPP, said: “Again, the IPA Bellwether Report shows continued growth in advertising and marketing services spending in the UK, although at a slightly slower rate.

“In addition, the report clearly shows that marketing services, such as direct and internet, are growing faster than traditional media.

“Clearly, clients are looking for new media and technology alternatives.”

Jim Marshall, chairman IPA Media Futures Group and chairman of Starcom UK Group, said: “The underlying trend is still largely positive but there is a clear slowing down in the rate of growth and the market is still subject to short-term fluctuations.

“What this also reflects is the importance of achieving and demonstrating payback on advertising investment, which would suggest why direct marketing and internet continue to be more buoyant.”

---