LONDON: Uncertain economic times are driving marketers to shift their spending into activation – and digital advertising – according to the latest IPA Bellwether Report.

The report for Q2 2017, based on data drawn from a panel of 300 UK marketing professionals, showed that UK marketers have revised up their internet budgets to the greatest extent since Q3 2007.

The net balance of +22.7% was up sharply from the first quarter figure of +16.9%. And within internet marketing, search/SEO (+15.6%) and mobile (+3.0%) both continued to record upward revisions to budgets.

The increase in internet budgets fuelled growth in overall marketing budgets, which registered a net balance of +13.1% in Q2, compared to +11.8% in Q1.

Main media advertising also grew, although to a slightly softer degree than in the preceding quarter (net balance: +9.8%, down from +10.7%), as did PR (+2.1%) and events (+2.1%).

Other areas saw reduction, most notably sales promotions, which recorded a net balance of -10.7%, down on the previous quarter’s +1.2%. Reductions in budgets occurred in market research (-6.2%), direct marketing (-4.7%) and ‘other’ (-2.6%).

Paul Bainsfair, Director General of the IPA, noted that “The election result has thrown further uncertainty into an already volatile environment.

“Specifically for marketers this has meant a desire, where possible, to seek out more activation-driven advertising. As evidenced strongly in this latest Bellwether Report, this has resulted in a further move towards advertising in the digital space.”

But even as marketing budgets were rising, marketers were becoming more gloomy about their own business's and their industry’s financial prospects.

A net balance of +9.8% of the survey panel was optimistic regarding their own financial prospects, down from +13.9% in Q1 and the lowest recorded by the survey since the end of 2012.

When considering the financial prospects for their industry, there was a net balance of -12.6% compared to -5.7% in Q1.

“The Bellwether survey continues to perfectly encapsulate the present economic situation presiding in the UK,” said Paul Smith, Senior Economist at IHS Markit.

“Current economic conditions are sufficiently strong enough to support higher sales and demand, encouraging firms to provide product support through ongoing marketing budget expansion.

“However, the uncertainty caused by Brexit and a surprising general election outcome are skewing risks to future growth broadly to the downside resulting in subdued financial prospects, both at the company and wider macro levels.”

The latest results from the AA/WARC Expenditure Report, the only source of historical quarterly adspend data and forecasts for the UK, are due to be published next week.

Data sourced from IPA Bellwether Report; additional content by WARC staff