UPDATE: UK Companies Cut Marketing Budgets In 2Q - Survey

(Adds details, WPP recent forecast.) By Lilly Vitorovich Of DOW JONES NEWSWIRES LONDON (Dow Jones)--U.K. companies cut their marketing budgets in the second quarter ended June 30 amid uncertainty over the economic outlook, according to an industry survey Monday. Around 20% of companies reported a cut to their spending, while 15% increased their budget, the latest Bellwether Report, published quarterly by the Institute of Practitioners in Advertising in collaboration with accountancy firm BDO LLP, found. Business confidence has also fallen with sentiment the lowest for a year. However, the rate that companies cut their budgets was much slower than at the height of the downturn, according to the survey, which is based on around 300 U.K. marketing executives. While marketing budgets are still set to increase in 2010 from a year ago, it is unlikely to rise at the pace expected at the start of the year, and the latest survey findings suggest the U.K. economy is now entering a phase of slower growth. Main media budgets were revised down in the second quarter, contrasting with a modest upgrade in the first quarter. The only two categories to report an increase in marketing budgets were direct marketing and the Internet, due to the expansion in social media, advertisers' desire for increased measurability and accountability, and lower investment costs, according to the study. "After a strong rebound in Q1, optimism and confidence appear to be waning, resulting in a slight downward revision to the rate of growth in marketing budgets compared to the start of the year," said Andy Viner, head of media at BDO. There are increasing signs that uncertainty over economic prospects continue and that companies remain focused on "cost control against a backdrop of the risk of a double dip," he added. WPP PLC (WPP.LN), the world's largest advertising company by revenue, late last month reiterated that it expects organic revenue--a closely watched metric in the ad industry that strips out acquisitions, disposals and currency movements--to up around 2% in 2010 from a year earlier. WPP's organic revenue was up 2% in the first five months of the year, on a strong rebound in U.S. advertising spending and growth in Asia. -By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290; lilly.vitorovich@dowjones.com (END) Dow Jones Newswires July 12, 2010 04:20 ET (08:20 GMT)