Market research budgets rose in Q1, finds IPA Bellwether

The Bellwether found that there was a net increase of 1.4% in market research budgets in the results for the first three months of the year, with 13.6% of panellists saying budgets rose while 12.2% signalled a reduction.

However, the report said that growth was unlikely to extend into the 2024/25 financial year, with a net balance of 4.4% of panellists anticipating cuts to market research budgets, which is the most pessimistic forecast since 2021/22.

Overall marketing budgets saw their second strongest upturn since the second quarter of 2022, albeit slightly down from last year.

The report said 24.4% of panellists said overall marketing budgets increased in Q1, compared with 15% that saw a contraction.

Although this led the net balance to fall to 9.4% from 14.7% in the final quarter of 2023, it was nevertheless the second highest in almost two years.

Events recorded a series-record expansion, with its net balance at 23.1%, from 15.9%, with sales promotions budget growth at 4.9%, up from 1.4% the previous quarter.

Direct marketing had a positive balance of 7%, albeit down from 12.6% the previous quarter, while PR had a net balance of 0.6%, from 1.9% at the end of 2023.

Marketing budget declines were limited to just two categories, although one of which was the main media segment at -0.7% from 1.9%.

According to more granular data on main media, the contraction was driven by out of home (-10.8%, from -8.1%), published brands (-5.7%, from -1.4%) and audio (-4.5%, from -7.0%).

This slightly offset growth in other online (+7.1%, from +13.2%) and video (+0.8%, from +6.6%), while other marketing activity not already accounted for also saw budgets shrink in the first quarter (-4.3%, from -6.4%).

The Bellwether added that 40.7% of the survey panel anticipated a rise in the amount available for marketing, compared with 18% reporting cuts, providing a net balance of 22.8% for 2024/25.

Response

Paul Bainsfair, director general, IPA
Ahead of a suspected lightening-up on some economic pressures closer to home in the coming months, and despite wider geo-political uncertainties, UK companies are once again recognising the value of advertising by revising their spend up this quarter.

One note of caution, however, is that we seeing companies revert to upping their promotional spend while revising their main media spend down – a trend that had been bucked over the past couple of quarters.

As always, a careful balance needs to be struck to ensure longer-term growth, for which greater investment in brand advertising, particularly in main media, pays dividends.

Joe Hayes, principal economist at S&P Global Market Intelligence and author of the Bellwether report
Greenshoots of recovery are appearing across the UK economy. With business survey data suggesting UK gross domestic product will expand in the first quarter, it’s no surprise to see another strong round of marketing budget growth.

Cost-of-living pressures and high borrowing costs has led household and businesses to retrench in recent times, making the market more competitive to earn and retain customer business. Throughout this period, we’ve seen marketing perform strongly, so it’s very encouraging to see that firms are staying true to the course that has clearly yielded positive results.

Rachel Macey, director, TGI, Kantar Media
There are pockets of potential growth if you know where to look, and whether it’s events or direct marketing, the key to teams making their budgets go further this year will be identifying those people who are loosening their purse strings, understanding what drives them and building campaigns around them. 

Just in the past two years, the proportion of Gen Z who say they prefer to buy products from companies who sponsor exhibitions or music events has grown from 14% to 19%. Diving into the subtleties of data in this way is absolutely key to helping brands and their agency partners develop more sophisticated targeting and maximising return on investment.

Nataly Kelly, chief marketing officer, Zappi
Companies are adapting by shifting away from expensive traditional methods to more streamlined, cost-effective ways of gathering insights, including AI-powered tools. This shift allows them to integrate insights from research right from the start and keep the consumer at the table when making business decisions.

These tools not only save money but also improve the speed and relevance of the data collected, ensuring market research remains a dynamic, strategic asset for brands aiming to make informed decisions and achieve long-term success. This focus on efficiency and agility will help market research remain an integral part of any marketing campaign, even in the face of budget constraints.

Chris Freeland, executive chair Europe, Middle East and Africa, and Asia-Pacific, RAPP
While I think many of us are still feeling the effects of a challenging market, it’s encouraging to see that the latest report sheds a more positive light on Q1.

As the economy begins to improve and consumers get to grips with the cost-of-living crisis, the once clutched purse strings are loosening and there finally seems to be a sense of optimism towards consumer spending. 

While an optimistic report, we’re not quite out of the woods yet. Businesses need to balance accordingly to come out the other side of this uncertainty stronger.