“Negative hype” around the Autumn Budget has seen marketing budgets fail to grow for the first time in almost 4 years.
The Q3 IPA Bellwether Report did highlight some positives, with PR and adspend leading the charge.
“After some bumper quarters for UK marketing spend, and a decade-high expansion in the last survey, the Q3 Bellwether report suggests that companies have dialled back their advertising activity levels,” explained Joe Hayes, Principal Economist at S&P Global Market Intelligence and author of the Bellwether Report.
“The result is disappointing and ends a strong sequence of growth, although perhaps it is more of a temporary step back as opposed to the start of a downward trend. One reason why this might be the case is the Autumn Budget, which is subject to much uncertainty about what new policies the government will announce. Fears of unfavourable taxation changes were frequently cited by panellists. Indeed, throughout the Bellwether survey’s long history, there have been several general elections, and history tells us that political uncertainty often weighs on decision-makers.”
The survey of UK businesses found that equal numbers were revising their marketing budgets up, as those revising them down.
Despite this, Public Relations saw the most significant upward revision, with the net balance (those revising up against those down) at +11%, compared to +2.6% in the previous quarter.
- Events had a net balance of +9.9%, but this was against +17.2% previously.
- Direct marketing’s net balance was +9.7%.
- Main media advertising rose from +3.5% to +4.3%, indicating the strongest growth in a year.
Main media includes:
- Big-ticket video campaigns (+11.7%);
- Out of Home which was -15.7% its steepest decline since Q2 2022;
- Audio’s net balance dropped to -10.0% from -5.5%;
- Published brands advertising was -4.4%;
- And other online marketing budgets was -1.4%, from +15.3%.
Elsewhere, Sales promotions budgets continued to grow, registering a fourth consecutive quarterly increase. However, the net balance fell to +3.2%, from +6.9% in the previous quarter, as UK inflationary pressures come back under control.
Market research saw its net balance drop to -1.5% from +3.2%, and other forms of paid marketing recorded -9.7% from -7.6%.
“Negative hype surrounding the impending Budget has no doubt created choppy waters for UK companies and their marketers to navigate,” said Paul Bainsfair, IPA Director General.
“Looking to the positives, this quarter’s results reveal that companies aren’t cutting their marketing budgets; they are pressing pause until they know more about the Government’s economic plans. As clarity emerges, this may indeed prove to be a temporary dip in overall marketing spend rather than the start of a long-term downward trend.
“Building on this, it is worth noting that our adspend forecast has been revised up for 2024 and 2025 because the economic data has been so strong so far this year, and that main media growth strengthened to a one-year high while sales promotion budget growth slowed – both of which are signals of bullishness.
“It is also worth remembering, as the expression goes, a smooth sea never made a skilled sailor. It is in the tough times that we know that our highly skilled, experienced agencies and their trusting, brave clients can reap significant market share for brands by continuing to invest in advertising. By raising their advertising voice when others go quiet – particularly in longer-term brand-building media, brands can achieve greater market stand-out, and in doing so strengthen their value and embolden their price elasticity.”
Adspend forecasts have been revised up for 2024 and 2025 to 1.2% from 0.6%.
Sue Benson, Managing Director, The Behaviours Agency and IPA City Head for Manchester & North West said:
“Whilst the Q3 2024 IPA Bellwether Report findings aren’t a surprise at all they are still disappointing given the record highs seen last quarter. Every time I talk to my colleagues in the North West the conversation is broadly the same – clients are putting projects on hold or pushing back spend to 2025. I feel like I have spent the last five years saying we’ll just get the ‘insert major event’ out of the way and then it will pick up. With adspend forecasts rising for the rest of 2024 and 2025. hopefully the business climate will improve after the Budget and I don’t find myself saying it will all change after the US election or in the new year!”
Simon Buchanan McCann Manchester CEO:
“The most recent Bellwether report from the IPA makes for interesting reading although in the light of all the macro socio-political factors at play, it’s perhaps also unsurprising. But, as always, it’s what we do with the information that matters.
“And in good times and bad it’s the quality and the creative effectiveness of the work we deliver for our clients’ brands and businesses and our continued efforts to build for the future that will make the difference. And if we get this right we will all weather the storm.”
