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Early 2006 Spending on Marketing Will Be Timid, Says Blackfriars Index

Trade Show Executive
March 6, 2006
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By Jerry Kalllman, Contributing Editor

Maynard, MA – Total marketing spend for the year is forecasted to reach $1.047 trillion, matching the combined spending for financial services and insurance for the same period, according to Marketing 2006, compiled by Blackfriars Communications, Inc.   However, the report predicted that early 2006 spending will be timid.

The report also found that 2006 bodes poorly for traditional marketing channels such as advertising and direct mail, based on research which tracked budgets and spending for the last quarter of 2005 and attitudes and plans for all of 2006.  On the plus side, online marketing  is enjoying increasing popularity and importance in the mix. However, the report found that events are facing some challenges.  Carl Howe, who conducted the survey of 102 senior executives, noted that expenditures for events, which includes exhibitions, corporate promotions and meetings, dropped by two points (from 9 per cent to 7 per cent) in the first quarter of 2006. “It continues a trend first seen in mid-year (2005) and was attributed to bad weather, high fuel costs, and the dislocations caused by Hurricane Katrina,” he says.

Other findings:

▪ Actual marketing spend in 2005 was about the same as that for 2003, the baseline year --- which produced the Blackfriars Marketing Index of 100.

▪ Because firms only spent 73 per cent of their planned Q4 budget late last year, results for the quarter only reached 101 on the Index (a target of 141 reflecting substantial growth was anticipated) .

▪ Advertising dropped precipitously in Q4 as did Direct Marketing, while funding for Public Relations and Analysts Relations jumped to an Index rating of 135.

▪ Events maintained an 11 per cent share of marketing spend, placing exhibitions and other events at an Index rating of 101 or essentially equal to 2003 annual figures.

Generally the executives surveyed were satisfied with their companies’ marketing message, although they intend to boost nontraditional and online investments in the current calendar year.  This apparent contradiction was explained in part because these techniques were less expensive and more easily measurable.  One respondent ( a retail executive), said, “Print media, radio and TV spending will continue to suffer. Marketing will lean more and more toward internet marketing.”

These online activities are now taking as much as 23 percent of marketing budgets, Blackfriars contend.  This funding (for online advertising, direct e-mail, and Web site and Internet media) approximates the total set aside for all advertising.

The survey also pointed out that B-to-B companies project the largest marketing budgets (and led in Q4 2005 spending as well).  However, percentage-wise, B-to-C companies, with allocations reaching 29 per cent of their advertising budget, lead all enterprises in that category.  The report reveals that businesses plan to spend almost double the amount they did in 2005 for consultants and 26 percent more for Web and Internet media activities (including podcasts, blogs and Webinars).  

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