Firms revised down their marketing budgets for the first time in a year in the second quarter as business confidence took a hit, according to the latest Institute of Practitioners in Advertising (IPA) Bellwether Report.
But the downward revision was marginal, with 23 per cent of companies reporting a reduction compared with 22 per cent that reported a rise. As a result, adspend was down by 1.1 per cent.
Companies are under some pressure to cut costs as profit margins continue to be hit by weaker-than-expected sales and overall economic problems continue, the IPA said.
However, it is unclear as yet whether total marketing spend will increase this year, as initial projections had suggested.
Business confidence waned over the second quarter, following a surge seen three months earlier. Executives' views on their industry's prospects dropped from one per cent to -16.8 per cent.
At the start of the year, business optimism was buoyed amid hopes the global economy had turned a corner. But the slide in confidence reflects in part heightened uncertainty coming from the eurozone crisis.
Across sectors, spend on internet advertising was revised up to the greatest extent of all categories, with a net balance of 5.1 per cent.
Within this segment, spending on search engine optimisation was also revised up (7.4 per cent). Sales promotion budgets were revised up with the strongest rate of growth in nearly five years.
Main media, direct marketing and other categories were revised down.
Nicola Mendelsohn, IPA president, said: "With renewed concerns surrounding the economy both at home and abroad, in particular the problems surrounding the eurozone, it's 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%. Business optimism has also dropped from the high seen in the first quarter, but not compared to the low levels seen in late 2011.
"We shall wait and see how things evolve and if caution continues, but look forward to key events like the Olympics which we expect will provide a welcome boost."