NEWS22 October 2020

Market research budgets continue to fall in Q3

Covid-19 Media News Trends UK

UK – Market research budgets saw another marked decline in the third quarter (Q3 ) of 2020 as Covid-19 continued to heavily impact overall marketing spending, according to the latest Bellwether report by the Institute of Practitioners in Advertising (IPA).


The report, which is based on a survey of 300 UK-based businesses, found that 42.2% of respondents had a fall in their market research budgets in the three months to 30 September compared with the previous three months.

In contrast only 9.6% registered an increase to their budgets in Q3, meaning a net balance of -32.6% compared with -42.2% in the second quarter (Q2 ) of 2020.

The Bellwether report also found that total marketing budgets had continued their decline from earlier in the year, albeit at a softer rate than seen in Q2.

A net -41% of survey respondents saw marketing budgets cut, which was the second quickest decline since the survey began in 2000. But Q3 was still an improvement on Q2, which had a net balance of -50.7%.

Respondents cited the impact of Covid-19 as the reason for cuts to marketing budgets, with spending reductions needed to maintain profitability.

Ongoing social distancing measures meant that many firms were still operating below full capacity in Q3, which particularly affected some services companies that rely on face-to-face client engagement.

Events were the hardest hit part of advertising, according to the report, with a net balance of -64.1% in Q3, albeit an improvement on the -76.6% balance seen in Q2.

Direct marketing and main media advertising had a net balance of -25.3%, which was the best performing of the six categories included in the Bellwether report.

The ‘other’ category (-40.2%, up from -59.2% in Q2 ) saw the second-steepest reduction of all categories after events, followed by sales promotions (-36.0% from -51.2% in Q2 ), market research and public relations (-31.4% from -51.2% in Q2 ).

Data for the main media category saw that funding for ‘other online’ campaigns (-6.5% from -35.1% in Q2 ) was the least affected of the five sub-categories, followed by video (-16.1% from 39.3% in Q2 ), audio (-32% from 50% in Q2 ), published brands (-38.5% from 49.2% in Q2 ) and out of home (-50% from 61.2% in Q2 ).

On balance, firms were pessimistic about the future, with 48% downbeat and 16.8% optimistic. When asked about their company’s financial prospects, 34.6% had a negative view while 30.7% were positive.

However, a 11.3% rise in ad spending was forecast for 2021, according to the report.

Paul Bainsfair, director general of the IPA, said: “While Q2 marked the nadir for UK marketing budgets, we had hoped for a slightly sharper rebound to UK marketing budgets this quarter than we see here.

“With a second wave of Covid-19, coupled with ongoing Brexit negotiations, including bracing for no-deal, I think green shoots in the immediate term are increasingly unrealistic. What we do know, however, is that the evidence proves that those who can invest in marketing during the downturn will reap rewards in both the short and longer term.”