Firms cut ad spend for third consecutive quarter

LONDON (Reuters) - British companies cut their marketing budgets in the second quarter of 2011 for a third consecutive quarter, as firms focussed on cost cutting and protecting their margins in a tough economic climate.

The survey of around 300 British-based companies for the IPA/BDO Bellwether report found 22 percent had cut spending compared with 20 percent that reported an increase.

The net balance of -2.2 percent was the slowest rate of budget trimming for three quarters, it said, and up from the -5.1 percent recorded for the first quarter.

"The economy is going sideways and this seems to be the way it is going in the advertising marketplace too," said IPA President Nicola Mendelsohn.

A decline in marketing executives' confidence for their own companies - which dropped to the lowest in nine quarters - also did not augur well, said Mendelsohn.

Next year's outlook was brighter, however, with marketing spend certain to be boosted by the 2012 London Olympics, the report said.

The economy grew a sluggish 0.5 percent in the first quarter of 2011, with households' disposable income suffering the biggest fall in more than 30 years.

(Reporting by Rosalba O'Brien; Editing by Hans-Juergen Peters)