Advertising and marketing businesses are among the most confident about their prospects for the next six months compared with other industries, according to UK research from Santander Corporate Banking. But the figures show nearly double the number of firms suffered profit falls in the past six months, with 48 per cent reporting declines compared with 25 per cent recording increased profits.

The Santander Corporate Banking Business Confidence Index reveals that 81 per cent of advertising and marketing business owners are confident in the prospects of their own business for the first half of 2010. That compares with just 68 per cent who were optimistic when the research was first conducted in September 2009.

Almost one in eight firms say they are ‘very confident’, while 69 per cent are confident about the future with 19 per cent not very confident.

Confidence in the advertising and marketing sectors is higher than the national average, which showed that 74 per cent of firms were optimistic about the next six months. The national average has stalled since September 2009 when 75 per cent of companies were confident about their prospects.

But confidence is higher among firms with turnovers of £25 million plus – 81 per cent of those firms say they are either ‘very confident’ or ‘confident’ about their prospects and report average profit rises in the past six months of 14.1 per cent.

Profit pressure

The national analysis shows that it is the continuing squeeze on profits that is holding back confidence – half of companies say profits fell in the second half of 2009, compared with 21 per cent which reported an increase.

The average profit fall in the past six months is 16 per cent, compared with the average rise of 13.7 per cent. Profit decreases were highest among firms with an annual turnover of less than £1 million.

However, in the advertising and marketing sector, 48 per cent of firms have reported declines in profits, while a quarter have seen rises. The average fall in profits is 16.5 per cent,  while the average rise is 14.7 per cent.

Businesses in the construction/building services sector have been worst affected by the downturn with 70 per cent suffering a drop in profits in the second half of 2009. The average profits fall for the sector was 17.8 per cent with the travel sector seeing an average drop of 17.3 per cent. Firms supplying the Government/public sector saw the biggest average increase in profits, at 19 per cent, with the health/medical sector recording average profit rises of 17.6 per cent.

Business owners’ confidence in their prospects for the next six months

Five most confident business sectors:    

1. Health/Medical
   
2. Technology/IT/Telecoms
   
3. Advertising/Marketing  
   
4. Charity
   
5. Manufacturing  
   

Five least confident business sectors:   

1. Construction/building services
   
2. Transport      
   
3. Energy
   
4. == Travel  and  Agriculture    
   

Steve Pateman, head of Santander Corporate Banking, said: "The advertising and marketing sector has seen an impressive turnaround in confidence thanks in part to a better profits performance.

"The official end of the recession marks a turning point but sustained recovery and growth will be challenging, requiring support from the banking industry."