December’s clear general election result appears to have eased marketers’ concerns and renewed optimism about the year ahead, according to the latest IPA Bellwether Report.
A net balance of +4.0% of surveyed firms revised their total marketing budgets higher in the fourth quarter (up from -0.5% in the third quarter) – the strongest expansion since the start of 2019.
At the same time, the outlook for marketing spending in the 2020/21 budgeting year appears promising: a net balance of +15.7% of companies expect their total marketing budgets to be upwardly revised, a significant improvement from the 2019/20 forecast (+3.4%).
“The rise in total marketing budgets provides tentative signs of a momentum shift, particularly when coupled with preliminary data for the 2020/21 budget year,” said Joe Hayes, Economist at IHS Markit and author of the Bellwether Report.
“It appears that firms are looking to release the pent-up investment which has been put on hold amid the high degree of political and economic uncertainty which has plagued the UK business climate for well over 12 months now,” he continued, before adding a note of caution.
“While these positive developments will perk up enthusiasm for marketing budgets in the coming year, downside risks to the outlook remain at large, particularly if a business cycle recovery does not fully materialise and Brexit uncertainty descends again.”
The breakdown by Bellwether category showed that internet retained its status as top performer in Q4 (net balance of +7.9% from +11.1%), while there was a fractional upward revision to main media advertising (+0.5% from 0.0%).
All remaining segments recorded spending cuts, led by market research for a second successive quarter (-13.2% from -16.9%). Direct marketing (-7.7% from -7.0%), PR (-7.1% from -4.7%), sales promotions (-3.0% from -2.3%) and events (-1.1% from -5.9%) all continued to register downward budget revisions at the year end.
In the 2020/21 financial year, however, events marketing is expected to be the strongest area, with a net balance of +11.9% anticipating growth; main media is also forecast to see moderate gains (net balance of +6.3%), as is sales promotions (net balance of +2.0%).
A neutral outlook has been provisionally recorded for both direct marketing and PR (net balance of 0.0%), whereas market research and the “other” marketing activity category registered in negative territory (both -5.7%).
These findings, along with the recent general election removing a layer of uncertainty, prompt Bellwether to predict stronger adpsend growth over the next few years: 1.8% in 2020, rising to 2.0% in 2021, 2.2% in 2022 and 3.1% in 2023.
The current AA/WARC Expenditure Report projections put UK ad market growth at 5.3% in 2020. New data are due to be published Thursday 31st January.
Sourced from Bellwether Report
