Marketing budgets were revised down for the first time in a year during the second quarter of 2012 as profit margins were hit by weaker-than-expected sales.
According to the latest Bellwether report from the Institute of Practitioners in Advertising (IPA), concerns over the future path of the economy also played a part in constraining marketing activity.
Some 23 per cent of businesses surveyed said they had reduced their marketing budgets, compared to 22 per cent last year.
The IPA said that in light of the slight fall, it remains a "close call" as to whether total marketing spend will increase at all this year.
By sector, internet advertising budgets were revised up to the greatest extent of all categories with a net balance of 5.1 per cent.
However, this was the slowest rate of growth in a year, suggesting that even online has suffered as a result of external factors.
Sales promotion budgets were revised up, seeing the strongest rate of growth in nearly five years, while main media and direct marketing were revised down.
IPA president Nicola Mendelsohn said that with "renewed concerns" surrounding the economy, both at home and abroad, in particular the problems surrounding the eurozone, it was "not surprising" the signs are less encouraging.
"However given this situation, things do seem to be holding up nevertheless, spend is down but only very marginally at -1.1 per cent," she noted.
"Business optimism has also dropped from the high seen in the first quarter, but not compared to the low levels seen in late 2011."
Ms Mendelsohn said it will be interesting to see how things evolve, particularly in light of the upcoming Olympic Games, which is expected to deliver an economic boost for the UK.
Posted by Jon Aspinell on 17th July 2012
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