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Optimism dips among UK marketers

News, 17 July 2015

LONDON: The confidence of UK marketers' surrounding the financial prospects of their companies and their industry has taken a hit in the last quarter, despite marketing budgets continuing to grow.

This contrast was highlighted in the latest quarterly IPA Bellwether Report, researched and published by Markit Economics on behalf of the Institute of Practitioners in Advertising and based on original data drawn from a panel of around 300 UK marketing professionals.

The first report following May's general election found a net balance of +12.2% of companies registering an increase in budgets in the second quarter of 2015, up from +11.8% in Q1 and +6.1% in Q4 2014.

At the same time, however, the report detailed a "marked deterioration" in marketers' optimism regarding both companies' financial prospects and those of the wider industry.

In the case of companies, the net balance had declined to a nine-quarter low of +25.3%, from +37.8% in the previous survey; a similar trend was evident for the industry as a whole, with the net balance dropping to a two-year low of +13.1%, down from +26.0% in the previous survey.

In terms of sectors, events and sales promotion performed strongly, returning net balances of +7.4% and +6.0% respectively. The net balance for internet budgets, at +6.8%, was the lowest in two-and-a-half years.

While welcoming the "generally positive" findings of the report, Paul Bainsfair, IPA director general, reminded marketers that "you won't produce profits over time without maintaining brand-building adspend".

He added: "While it is good to see sales promotion activity is on the increase, the industry must guard against short-termism."

Looking beyond the headline figures, Paul Smith, senior economist at Markit and author of the Bellwether Report, admitted it was hard to read the underlying drivers of growth.

"On the one hand, companies are showing an increasing willingness to engage in corporate hospitality, conferences and sponsorship," he said.

"But belying this confidence is an increased willingness to engage in discounting and promotional activities designed to support sales at a time when the economic and financial outlook for companies has become just a little more uncertain."

The Bellwether prediction for adspend growth over the year remained unchanged at +4.2%.

Data sourced from IPA; additional content by Warc staff