Global Marketing Budgets Still Contracting

September 24, 2012

Marketing budgets continue to be squeezed around the world, details the [pdf] September Warc Global Marketing Index (GMI). The budget component of the index stands at 48 this month, up from 46.1 last month, but continuing a 4-month run below the threshold score of 50. (A score above 50 indicates a generally improving environment, while a score below 50 indicates a generally declining environment.) Marketers in the Americas are the only to record positive growth, with a score of 53.5, stable from August. Asia-Pacific showed some improvement, up 3.1 points to a score of 49.1, as did Europe, up 3.9 points to 44.8. Still, budgets in both regions remain below the threshold level and are therefore still declining.

Over the past year, the global marketing budget index score has been in positive territory for only 3 months.

Digital Budgets Continue to Outshine Traditional Media

Continuing a pattern observed by the index for several months, marketing budgets devoted to online (including and excluding mobile) channels continue to increase, while traditional media budgets remain on the decline.

Digital ads, excluding mobile, posted a score of 74 in September, the highest of the various channels measured, although this was down slightly from 74.4 the previous month. (For more on online ad spending growth in the US, see here.) Mobile ad spending was next with a score of 67.2, although that also represented a month-over-month decline, of 2 points.

With regards to traditional media, TV posted an index score of 47.2, indicating contracting budgets, but an improvement over August’s 46.2. (A detailed examination of TV advertising spending in the US can be found in the following article: Data Dive: US TV Ad Spend and Influence.)

Out-of-home and radio also had scores below the threshold, with press having easily the lowest score, of 35.3.

Overall Marketing Optimism Tilts Positive

Contrary to the overall decline in marketing budgets, the other components of the headline GMI were in positive territory in September. Trading conditions saw a small increase from 54.4 in August to 54.7, while staffing levels fell slightly from 56.6 to 56.1, though remaining positive.

These results helped improve the headline GMI index up to 52.9 in September, its highest point since May (55.3). All regions improved, led by the Americas, up from 57.7 in August to 59.6, almost at the 60-point threshold considered by Warc to indicate a rapidly improving environment.

After 4 consecutive months of declining scores, the headline GMI for the Asia-Pacific region rebounded to 53.8. And in Europe, the headline GMI crossed the 50-point threshold (50.2) for the first time since May.

About the Data: Warc’s global panel (1,225 members) consists of experienced executives working for brand owners, media owners, creative and media agencies and other organisations serving the marketing industry. The panel has been carefully selected to reflect trends in the three main global regions: Americas, Asia Pacific and Europe.

Data collection period: 3-14 September 2012. The Global Marketing Index results are calculated by taking the percentage of respondents that report that the activity has risen (“Increasing”) and adding it to one-half of the percentage that report the activity has not changed (“Unchanged”). Using half of the “Unchanged” percentage effectively measures the bias toward a positive (above 50 points) or negative (below 50 points) index. As an example of calculating a diffusion index, if the response is 40% “Increasing,” 40% “Unchanged,” and 20% “Reducing,” the Diffusion Index would be 60 points (40% + [0.50 x 40%]). A value of 50 indicates “no change” from the previous month.

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