Letter: Good news! Marketing budgets still flat

After reading the article 'Marketing budgets flat to up for 2004,' (May 17/04, p.4), I felt that Strategy could perhaps do with a math lesson.

After reading the article ‘Marketing budgets flat to up for 2004,’ (May 17/04, p.4), I felt that Strategy could perhaps do with a math lesson.

The article relates to the new ICA survey of marketing budgets, which is based on a panel of 270 executives in Canadian companies. The article reads: ‘According to a new study from the Institute of Communications and Advertising (ICA), things in the ad industry are looking up. But marketers are telling a less optimistic story, with the majority contacted by Strategy citing flat budgets, in keeping with the country’s flat economy.’

The ‘less optimistic story’ draws on Strategy’s interviews with marketers. However, even a glance at the top-line data from the ICA survey would have shown that no such contradiction exists and that the article was wrong to criticise the survey findings.

Just like Strategy found in its interviews, the ICA survey in fact found that the majority of companies were holding budgets flat. Some 64% of the companies polled by the survey reported that they had not changed their budgets. Moreover, a further 13% reported that they had cut their budgets during Q1.

Our assertion that ‘things are looking up’ reflects the fact that the number of companies raising their marketing budgets outnumbered those reporting a decline (23% against 13%). A focus on the ‘net balance’ of those reporting an increase less those reporting a decrease is standard practice for surveys such as this, as subtle changes in net balances can be harbingers of important turning points. (For any survey, it should be noted that the majority of companies will tend to report ‘no change’ in business conditions in all periods except times of unusually strong expansion or contraction.)

The new ICA survey has been developed at considerable expense, incorporating best industry practice and a carefully constructed survey sample. It is hoped that it will be used by the marketing industry to improve marketing decisions, in particular allowing companies to improve marketing expenditure decisions. As such, I would have thought a journal such as yours, which purports to serve the industry, would support such an initiative rather than try to find fault with it.

Chris Williamson, Chief Economist, NTC Research Limited, London, U.K.