Marketing budgets grow as event spend stutters, Q1 Bellwether Report reveals

UK marketers have revised their budgets up in Q1 2017, with significant growth recorded in internet and main media advertising categories, although event spend appears to have dropped, the latest IPA Bellwether Report has revealed.

The latest results extend the record run of growth of marketing budgets to four-and-a-half years and details marketers’ positive budget plans for 2017/18.

The report, which has been conducted on a quarterly basis since Q1 2000, reveals a net balance of +11.8% of companies registering an increase to their budgets during Q1 2017, down fractionally from Q4 2016’s net balance of +12.9%.

Looking ahead to 2017/18 budget plans, UK marketers have indicated a positive outlook, with a net balance of +26.1% of companies signalling growth in their total budgets for the coming year.

The latest survey again highlighted that budgets were raised across a broad-range of Bellwether categories, led by internet where growth picked up to the highest recorded in just under four years (net balance: +16.9%, from Q4 2016’s +12.1%). Within this category, marketing activities related to search/SEO rose to the greatest degree in over two years, as highlighted by the net balance improving to +15.1% (from +7.1% in the preceding quarter).

Mobile-based advertising also picked up, with the net balance of +10.3% (Q4 2016: +3.9%) the highest recorded in the short three-quarter series history.

Main media advertising also enjoyed a strong upward revision to budgets during the first quarter of 2017.

The respective net balance jumped to +10.7% during Q1, up from +5.1% in Q4 2016 and the best recorded by the survey for just under three years.

Elsewhere, direct marketing budgets increased to the greatest extent for two years following stagnation in the previous quarter (net balance: +5.3%, from 0.0%), while there was a noticeable slowdown in the events category. Latest data showed the respective net balance declined to +4.9%, from +12.3% in the previous quarter and the lowest reading recorded by the survey for over a year.

Lesley Mason, client services director at FreemanXP EMEA, acknowledged the Q1 Bellwether results pointed at a decrease in event spend, adding: “I don’t believe events are on the decline overall. There was a lot of global political upheaval around the end of last year, and this has had a flow-on effect to Q1 of 2017. It’s likely that many brands have opted for a quarter-by-quarter approach to their marketing spend, as this allows them react to changing external conditions very quickly.

“This reactionary method means brand experience agencies need to be agile enough to react in efficient and effective ways, and it’s integral that we retain and grow talent with a broad range of skills so that they can respond to our clients’ diverse needs.”

Latest data revealed an improvement in company financial prospects during the first quarter of 2017. With over 32% of the survey panel indicating positive financial prospects, compared to under 19% that indicated a fall, the respective net balance of +13.9% was up from +11.2% in the previous survey period and the best recorded in over a year.

Although GDP growth is expected to slow in the first quarter of the year, the economy seems to have sufficient momentum to grow at a solid pace in 2017 (the OBR are expecting a rise in GDP of 2.0%). The Bellwether therefore predicts that this will help lift adspend by 0.6% in real terms over the year as a whole (previous forecast: -0.7%).

Further out, Bellwether predicts a stagnation in adspend in 2018, before growth recovers in 2019 and 2020 to rates of 1.8% and 2.3% respectively.

However, given the difficulties in trying to predict the effects on the economy of Brexit negotiations and subsequent UK departure from the EU in 2019, current forecasts remain especially uncertain. The calling of a snap General Election is also likely to muddy the forecasting waters.

Paul Bainsfair, director general, IPA said: “Once again the Bellwether shows that while the impact of Brexit remains uncertain, marketers are continuing to invest in marketing.”

 

The Bellwether Report is researched and published by Markit Economics on behalf of the IPA. First published on the 17 July 2000, it features original data drawn from a panel of around 300 UK marketing professionals and provides a key indicator of the health of the economy.

Paul Colston

Author

Paul Colston

Managing Editor, Conference News & Conference & Meetings World.

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