The Bellwether Report from the Institute of Practitioners in Advertising (IPA) found that declines in corporate profits and lower consumer spending heavily impacted marketing budgets for the first quarter of 2008, with internet spend masking a poorer picture for print and other sectors.

According to the report, main media marketing budgets, which include press, outdoor and directories, experienced little change, but were largely propped up by stronger spending online, particularly in search engine marketing.

Direct marketing budgets, which include catalogues and direct mail, dropped 6.3% in the quarter. The overall increase for 2008 is also weak, failing to match earlier provisional figures and likely to result in the weakest growth recorded since the survey started.

DMA Director of Media Channel Development Robert Keitch told printweek.com: "It's not earth shattering news that outside the front door it's a bit tough."

He pointed to a number of factors as to why direct marketing is suffering, despite its often outperforming in an economic downturn, as companies look to short-term and accountable campaigns.

"It's not as simple as saying DM will do well out of a recession. It's going to be a very bumpy ride."

He said by far the most prominent users of direct marketing is the financial services community, and these have shown the biggest cutbacks in their budgets    

Omnicom's Diversified Agency Services (DAS) president and CEO Europe Anthony Wreford agreed. "The issues within financial services... probably accounts for most of this decline. For the remainder of 2008, it will probably be a tactical market as companies keep a very close eye on their sales figures."