* Companies adapting to low-growth environment with steady budgets and low-risk strategies

* SMEs continue to invest for growth; large companies setting more cautious targets

UK businesses are more confident now than three months ago about their prospects for 2013, according to a major survey of marketing professionals. The Marketing Confidence Monitor, run by The Chartered Institute of Marketing (CIM) and supported by Deloitte, found that while consumer spending is forecast to fall in the next three months, and concerns over wider economic issues persist, companies are cautiously optimistic about their own performance in the next 12 months.

The study, which is repeated quarterly and is produced from a weighted survey of more than 1,300 UK marketing professionals, found that 38 per cent of respondents are more confident in their business’ ability to meet its financial and growth targets this year compared to last year.

Further, the research reported an increase in the overall confidence score of more than one and a half points since October 2012, demonstrating a positive outlook for 2013*. In addition to respondents’ perception of their own business’ prospects, this overall score takes into account views on the wider economic situation, job security, pay prospects and budget forecasts.

But this upbeat assessment is allied with a widespread acceptance of limited growth and static investment. The study found that almost half (46 per cent) of businesses expect marketing spend to remain unchanged over the next three months, with another 40 per cent anticipating that spend will either rise or fall only marginally. Further, almost two-thirds (63 per cent) of companies said they are not planning any new marketing hires in the next quarter.

The vast majority of businesses are also adopting lower-risk strategies for 2013. According to the research, 75 per cent of marketing departments are targeting organic growth within their current customer base as a top priority, while just 46 per cent are focusing on new market entry or development.

This caution is perhaps explained by marketers’ concerns about wider economic performance. More than half of UK marketers (54 per cent) anticipate declining consumer confidence over the next three months, and over 50 per cent also expect a contraction in UK GDP in the next quarter.

The study also found SMEs in a more optimistic mood than their larger counterparts, continuing the trend uncovered by the first wave of research in October 2012. Micro and small businesses are notably more confident than medium and large organisations in their ability to meet financial and growth targets over the next 12 months, compared to the last 12 months. The research found that 45 per cent of micro and 42 per cent of small businesses are more confident, compared with 35 per cent of large businesses. Marketers in SMEs were also more confident about career prospects, job security and access to investment than their colleagues in larger companies.

Anne Godfrey, Chief Executive of CIM, commented: “It’s encouraging to see that small businesses are pressing forward with marketing investment and jobs – critical for fuelling growth – but it’s clear that most businesses are having to adapt to prolonged periods of limited demand and reduced investment. At the moment there is a cautious optimism in organisations’ ability to survive in this harsh climate, but the forecasted decline in consumer confidence is particularly worrying: we’ll be watching the next quarterly update of the index keenly to see whether today’s relatively positive outlook can be maintained.

“Marketing plays a crucial role in driving growth and performance, and marketers are uniquely positioned between the business and the customer. They understand how consumer confidence and business sentiment interact, and our study shows that times are clearly still very tough.”

Nick Turner, partner in the marketing & insight practice at Deloitte, said: “There is a clear paradox here between the growing optimism around business performance and the shift towards lower-risk and more tactical marketing strategies.

“There is always a need to balance delivery this year with long term growth. However, marketers’ confidence in their ability to measure short term response-driven marketing may be at the cost of less tangible long term brand building. There is a risk that the pendulum has swung too far in favour of these tactical activities and that strategic investment in brands and innovation is being placed on hold as too difficult to justify.”