Investment continues in marketing, in spite of the economy, according to the latest IPA Bellwether report.
The cost of living crisis means UK companies are putting a greater emphasis on sales promotions, to help consumers.
As a category, sales promotions, are at the highest levels in the 23 year history of the IPA Bellwether report.
However, companies are less upbeat about their own financial prospects and industry-wide confidence continues to deteriorate.
The report surveys around 300 UK-based firms, to examine trends across the sector.
Just over a fifth of survey respondents observed growth in total marketing spend during the second quarter, while 14.4% said they’d be making cuts. This led to a positive net balance of +6.4%. This Q2 figure compares to +8.2% in Q1.
By category, only 3 of the 7 surveyed were positive, with sales promotions leading the way at +13.4% (Q1: +8.8%). Events too remains on the rise post-Covid – +9.8% (Q1: +6.3%); the third to record growth was direct marketing, up +7.3% from +4.2%.
- PR budgets are on the decline at -1.9%;
- Market research -2.9%;
- Other marketing not already accounted for -6.8%.
Main media also fell, for the first time since Q3 2022, although it still recorded a net balance of +8.3% (Q1: 10.5%). Report authors suggested that this could represent a reactive switch from main media to sales promotions.
“Against a backdrop of escalating inflation and interest rate increases, it is heartening to see the stalwart attitude of many brands, responding with agility to their consumer intelligence. It is equally heartening to see marketing strategies addressing the very needs of the UK market at the moment,” said Richard Aldiss, Managing Director, McCann Manchester and IPA Chair for England & Wales.
“The rise in budgets across sales promotion is testament to this, showing brands supporting their customers during the cost-of-living crisis. However, we know that those brands applying a long-term lens will reap the benefits.”
Within the main media category:
- Other online (net balance of +8.3, from +10.5%);
- Video (+3.2%, from +7.9);
- Audio (-8.0%, from +1.7%);
- Out of Home (-7.1%, from -12.4%);
- Published brands (-5.0%, from -1.9%).
“As we continue to face into economic headwinds, it is unsurprising that there has been a slight reduction in forecast main media budgets, with a net balance of -2.5%,” added Amy Lawrence, Digital Director, MediaCom & Chair of the IPA Digital Marketing Group.
“As inflation continues to bite in all areas, there is clearly some cautiousness amongst advertisers. This cautiousness is reflected in the more granular breakdown of budgets, with “other online” at the top (+8.3) – a trend we’ve seen throughout the turmoil of the last few years, as advertisers focus more on performance tactics. It’s therefore pleasing to see that video is also increased (although to a lesser extent) – a testament to the need to invest in brand too. As we move into H2, it is clear that the need for flexibility is paramount.”
IPA said adspend recovery is set to gather pace in 2025 following subdued forecasts for 2023 and 2024.
Since the latest Bellwether survey, report authors S&P Global have upgraded their forecast for the UK economy and expect GDP in 2023 to grow by 0.3%.
Overall for 2023, the Bellwether Report forecasts adspend declining marginally by -0.6% (compared to -0.9% previously).
