Companies cut advertising budgets in the fourth quarter of 2009 but the rate of decline was at its slowest in nearly two years, a report said on Monday, adding to the improving level of confidence.

The Bellwether report by the Institute of Practitioners in Advertising and accountants BDO said budgets for 2010 had also been set higher on average compared to 2009.

"Companies were the most upbeat about the financial outlook for their industries since the question was first asked in the second quarter of 2005," the report said.

"Thirty-five percent of panellists reported that they were more optimistic about the prospects for their industry compared to 22 percent that were less upbeat."

Total marketing budgets for the current financial year were revised down for the ninth quarter in succession, with about 25 percent of companies reporting a reduction in total spend compared to 18 percent which recorded an increase.

Of the different types of adverting, budgets for Internet advertising were revised up for the second quarter running in the last three months of the year, with the latest upgrade the most marked since the first quarter of 2008.

"The survey results are good news for the marketing services sector," said Andy Viner, Head of Media, BDO LLP. "After nine consecutive quarters of reduced marketing spend, it appears that the rate of decline is at its slowest in nearly two years."