The Institute of Practitioners in Advertising (IPA) Bellwether Report shows the current period of growth has now extended for six years, but that the outlook is becoming increasingly uncertain, with growing cost pressures and the likelihood of muted adspend growth for the rest of 2018 and through next year.
Overall, the report reveals the most downbeat view of industry-wide financial prospects since the last quarter of 2011.
Almost 21% of Bellwether panel members said they had increased total marketing budgets in the third quarter, compared with 18% who had seen a decline, a net balance of +2.5%, and considerably weaker than the +6.5% seen in the second quarter.
However, the growth trend in digital marketing continued, with a net +13.6% of companies increasing their budgets. In particular, search/SEO, and mobile marketing saw spending boosts of +5.8% and +1.9% respectively.
Big-budget marketing campaigns involving TV, radio and cinema saw similar growth to the previous quarter with a net balance of +4.9% of firms spending more (+4.8% in Q2).
Other categories that saw spending growth were PR (+4.2%), and sales promotions (+0.6%). In contrast, there were falls in spending on events marketing (-1.1%), market research (-3.7%), direct marketing (-7.4%), and “other” marketing (-9.9%).
While the outlook among executives showed a net balance of +5.7% who were optimistic about their own company’s prospects, this was down from a net balance of +13.3% in the second quarter, and is the most downbeat view in six years.
Assessments for the industry as a whole were significantly more pessimistic than in previous surveys. The net balance was -21% in Q3, compared to -9% in the second quarter. That’s the most negative outlook since the final quarter of 2011 (-44.9%).
Joe Hayes, author of the report and economist at IHS Markit, said marketing spending growth had been slowing since the end of 2016.
“Latest Bellwether data revealed further sluggishness, as growing uncertainty towards the UK economy’s outlook as well as rising cost and competitive pressures impact companies’ discretionary spending,” he said.
“Nonetheless, marketing executives are still being allocated greater expenditure, particularly in the digital space. Strong competition is driving firms to explore new innovative methods to bolster market shares and retain existing clients.”
Sourced from the IPA; additional content by WARC staff