Advertising should benefit from looser budgets

By Georgina Prodhan

LONDON (Reuters) - Advertising, information technology and outsourcing are among the sectors likely to benefit first from a cautious uptick in corporate spending as firms jostle for position coming out of the recession.

Although firms reporting this quarter are still entrenched in cost-cutting mode to prop up profits in the face of falling revenues, a few have begun running new advertising campaigns to gain an easy advantage in visibility while rivals lie low.

"It's probably a bit early yet to be expecting a big turnaround," said Gareth Williams of ING's equity strategy team. "It's more a story for next year than the next few months."

"But if there is a turnaround, it's probably going to be in areas like advertising and technology first, where it's easier to move quickly, than in more industrial, capital-intensive sectors," he said.

A survey in September by CFO Magazine and Duke University found that spending on advertising, research and development and technology was seen flat over the next 12 months after several negative quarters -- compared with continued declines elsewhere.

Capital spending was still expected to shrink, the poll of 657 U.S. finance executives found, although by a much smaller percentage than they forecast in the previous quarter.

Companies have been using capex cuts as a key measure to conserve cash.

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