Continued political and economic uncertainty over Brexit led to subdued consumer and business confidence, the result being widespread marketing budget belt-tightening, the report shows.
And, for the first time since the third quarter of 2012, Bellwether panellists had a generally downbeat outlook on financial prospects for their own companies.
Other highlights of the Institute of Practitioners in Advertising (IPA) quarterly report are:
- A noticeable moderation in spending gains for internet-based marketing
- Sales-promotion budgets are the strongest growing category
- Company-level financial prospects have turned negative for the first time since Q3 2012
- Adspend growth forecast for 2018 is reduced, but some modest bounce-back expected this year
An orderly withdrawal, on the other hand, would mean spending in the sector could rise by 2.7% to £23.9bn this year, says the report.
According to the Bellwether report, those marketers who saw growth in budget spending in 2018 Q4 (+16%), were exactly matched by those who saw spending cuts (-16%), meaning budgets effectively flatlined.
Some optimism regarding 2019 was evident, however, with new product launches expansion into overseas markets, digital transformation and technological development reported, all of which were expected to bring growth opportunities.
But it was the economic and political uncertainty of extended wrangling over Brexit and the effects on the economy that was the standout concern among marketers.
The trend towards digital advertising continued in Q4, but growth moderated significantly, from +13.6% in Q3, to just +2.1% in Q4. Within online advertising, spending on search/SEO fell back from +5.8% in Q3 to -3.9%, recording the first such fall in spending since Q2 2009.
Mobile spend was also down to -2.4%, from +1.9% the previous quarter. Sales promotion spending, however, saw an increase – the net balance was +3.8%, from +0.6% in Q3. Events budgets also saw a slight increase, up +2.6% from -1.1% the previous quarter.
Elsewhere categories were cut or subdued, with main media advertising – including large-scale campaigns on TV and in newspapers – saw the first negative growth for two quarters, with the net balance falling to -6.5% from +4.8%.
Looking ahead to financial year 2019/20, the proportion of marketers expecting to see increased budget spending was 27%, barely higher than those who predicted cuts (26%).
The report revises higher its adspend forecast for 2019, from 0.7% growth to 1.3%. This takes into account forecasts of a bounce-back in business investment, and assumes Brexit uncertainties will ease.
IPA, Enders Analysis; additional content by WARC staff