NEWS15 April 2021

Fall in market research budgets begins to slow

Covid-19 News Trends UK

UK – Advertising budgets for market research fell in the first quarter of 2021 albeit with the softest reduction in budgets since the beginning of 2019, according to the latest Institute of Practitioners in Advertising (IPA) Bellwether report.

Jar of money labelled 'budget'

The report said that 17.5% of the almost 300 panellists interviewed for the research reported a decline in advertising budgets for market research between January and March, compared with 25% in the fourth quarter of 2020.

The fall in budgets continued a trend seen in every IPA Bellwether report since the third quarter of 2015, but marked the softest reduction since the end of 2019.

The Bellwether report found that 8.2% of firms saw a rise in budgets in the first quarter of 2021 compared to 11.4% at the end of 2020.

However, 26% of firms said they saw a decrease in budgets, which was down from 36.4% in the fourth quarter of 2020.

The report also said that a net balance of -4.9% of panellists anticipated a reduction in market budgets during the 2021/22 financial year.

A net balance of -11.5% of panellists reported a fall in total marketing budgets in the first quarter of this year, down from -24% at the end of 2020.

The report said that Covid-19 was the main factor in falling budgets and some business mentioned cost-cutting programmes affecting advertising spending, but that the general trend was the business conditions were now stabilising after a difficult 2020.

Paul Bainsfair, director general of the IPA, said: “Despite remaining in negative territory overall, the vital signs from this quarter’s Bellwether report are looking ‘V’ encouraging for a bounce back in UK marketing investment.

“With companies’ confidence levels regarding their financial prospects soaring and with almost three-quarters of UK companies either revising their marketing budgets upwards or keeping them the same this quarter versus last, the trajectory is very much moving in a positive direction and at a good pace.”