Economic uncertainty prompted companies to reduce their ad spend for the second consecutive quarter earlier this year - but online ad spend is still growing rapidly, according to the Institute of Practitioners in Advertising’s Q1 Bellwether. Overall, a fifth of companies slimmed down ad budgets, though 13 percent increased spend. Brand Republic: “Although the report showed a balance of 9.2 percent of companies set their annual budgets for 2008 higher than last year, this was by far the weakest increase in the survey’s history.”

Direct marketing spend is being pulled back significantly, affected by financial services advertising, but 27 percent of companies increased online ad budgets while just five percent trimmed them back. It’s thanks to search marketing - 29 percent increasing spend in that area. This demonstrates that, amid market uncertainty, advertisers are looking for more guarantees as to the effectiveness of their buck. Report author Chris Williamson (via Reuters) “Pressure on profit margins led to a further trimming of marketing budgets in Q1, with planned expenditure for 2008 now set to grow less than had been indicated by the survey at the end of last year.”

Last week’s IAB/PwC survey found online ad spend beat forecasts through 2007, growing 38 percent to £2.81 billion - that’s nine times faster than what the pair said was a “relatively buoyant” UK ad market overall. It having grown 4.3 percent to £18.4 billion. 

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