Marketing budgets are on the rise at the strongest rate in over a decade according to the latest research from IPA Bellwether.
The Q2 IPA Bellwether Report looks at companies’ marketing spend intentions and confidence levels. The survey of around 300 UK business showed that planned marketing budgets rose from +9.4% in Q1 to +15.9% in Q2. That’s the highest since Q1 2014, when it was +20.4%. It’s also the second highest upward revision in the survey’s almost 25-year history.
The stand-out performer was Events, with +17.2%. That was followed by Direct Marketing, with budgets increasing for a 6th successive quarter (+8.9%).
Main media budgets, including spend allocated for big-ticket advertising campaigns broadcasted on television and radio, returned to growth after a reduction in Q1 (+3.5%).
This was driven by online (net balance of +15.3%) and video (+7.8%). Out of home remained static at 0%. However, Audio’s net balance was -5.5%, from -4.5% and published brands went to -6.3%, from -5.7%.
Sales promotions rose to 6.9%
Market research +3.2%
PR +2.6%
“In line with the brightening economy, decreasing levels of inflation and a new Government, this quarter’s Bellwether Report reveals real vim and vigour regarding UK companies’ marketing spend intentions. As we know, advertising is a lever for growth for companies and so it is great to see them capitalising on these developments,” said Paul Bainsfair, IPA Director General.
“While we welcome this positivity, it is worth noting that while inflation levels have come down, this hasn’t yet translated into prices, and as such strains on many household finances prevail. This is something we’ve seen in our recently launched 2024 IPA TouchPoints data where more than a third of consumers say they are struggling to cope on their current income. Companies would benefit from being cognisant of this in terms of their communications approach and messaging to their consumers. I suspect that those brands that can bestow their sense of value, trust and reward will fare well here.”
When it came to adspend, the forecast was revised higher for 2024, but while the mild recession experienced at the end of last year may have ended, there remain elevated borrowing costs, dwindling government financial support and high food and energy prices,
As such it’s anticipated that adspend (in real terms) will flatline in 2024 when compared with last year. However, this does mark an improvement from the forecast in the first quarter, when adspend was predicted to contract by an annual rate of 0.5%.
As for 2025 onwards, the outlook for both the UK economy and adspend are much more upbeat.
“There is a general air of optimism with the UK economy returning to growth and a new government installed so it was reassuring to see the latest Bellwether figures also going in the right direction,” added Gill Jarvie, Client Services Director, Republic of Media and IPA Chair for Scotland.
“Even more reassuring was the return to growth for Main Media budgets (+3.5%) having seen a reduction in Q1. Hopefully we’ll see this momentum continue into Q3.”
Richard Aldiss, IPA Chair for England & Wales stated:
“It’s great to see not only a continuation but also a strengthening of the optimism we observed in Q1’s Bellwether Report. The upturn in main media advertising budgets is particularly encouraging. While uncertainty undoubtedly remains, brands and marketeers are gaining confidence from economic and market indicators, rightly viewing this as an opportunity to invest for growth.”
In Yorkshire Alex Uprichard, Managing Director, IMA-HOME and IPA City Head for Leeds, Yorkshire and Humberside said:
“Who wouldn’t be positive about the news that UK businesses expanding their marketing budgets has risen by the highest level in a decade to +15.9% in Q2?
“There was every chance political uncertainty would stagnate investment decisions, but the winds of change have clearly driven more optimistic budgeting. The continued growth of events budgets indicates that real world experience is driving strong results for Bellwether companies. We’re witnessing it first hand as an agency, creating retail activations day-in-day-out for existing and new clients.
“Main advertising budgets experiencing growth is another positive indicator as we look towards planning season. We’re moving from reactionary short termism as the economic landscape starts to stabilise and are more able to work with our clients on long term objectives, which not only future proofs brands but the industry at large. So let’s keep going in this direction!”
And in the North West, Sue Benson, Managing Director, The Behaviours Agency and IPA City Head for Manchester & North West said:
“Despite England not winning the Euros, we did get growth and positivity in the pages of the IPA Bellwether. It finally appears as if we’ve turned a corner economically and I know that my colleagues in the North West will really hope that that translates into more positive trading conditions for the next six months. Short-term activation media – DM & events – are still driving the growth, but at least we’re seeing growth in main media usually associated with brand investment. With the Paris Olympics set to bring joy to our lives and talk of interest rates cuts, I think we can begin to work with a more optimistic and confident consumer.”
