Ad Budgets Raise as Spending Falls

Advertisers may need to continue to think outside the box if they want the biggest slice of the revenue pie. According to a new report, advertising budgets are increasing but spending is not.

by Kristina Knight

The report, from Blackfriars Communications, indicates that both online and offline spending were up in the third quarter of 2006. The bulk of Q3 spending was offline (41%). Online ads accounted for roughly 8% of the ad spend, a gain of about 2%. However the entire online budget (advertising, email and websites) accounted for 18% of the ad spend.

"While firms budgeted large amounts for marketing in 2006, they just didn't spend those budgets," said Carl Howe, a principal of Blackfriars in a prepared statement. "With executive attitudes toward marketing faltering, businesses fell back on tried and true media types that they could defend."

The report also surveyed executives as to their expected spending in Q4. The executives said they expected to increase spending by 50% over the average quarter spend in 2005.

According to the Blackfriars Blog, “. . .average marketing spending in Q3 was only 74% of what it was in 2005. That's not good. We further don't expect much improvement when we get the Q4 actual spending numbers, meaning that 2006 will likely be the worst year for marketing spending in the three years we've been collecting data.”