Senior marketers are braced for cuts in financial services budgets due to the credit squeeze, amid fears that overall expenditure in the marketing industry has peaked.
The Bellwether report, the quarterly index of marketing sentiment, provides the first evidence of budget-trimming by financial advertisers since the credit market turmoil began. Financial respondents reported cuts in sales promotions and direct marketing.
The Bellwether is produced by NTC Economics for the Institute of Practitioners in Advertising, the trade body and questions 250 UK companies on whether they have increased or cut budgets across marketing areas.
The result is a series of positive and negative balances providing indicators of the outlook for marketing spending, which is closely linked to corporate profitability and the overall economy.
The wider impact of Northern Rocks financial crisis on consumer demand for financial products and the tightening of credit markets that led to the bank’s crisis, could result in expenditure cuts within the marketing sector.
Chris Williamson, author of the Bellwether told the Financial Times: “The effects of the credit squeeze are likely to appear as a hit to profits, via higher borrowing costs and weakened demand.”
He added: “There is undoubtedly going to be weakening of profits in the second half. Financial services respondents are already attributing budget cuts to the credit crunch.”