NEWS21 January 2021
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NEWS21 January 2021
UK – Budgets available for market research fell in the fourth quarter of 2020, as overall marketing budgets continued to decline sharply, according to the IPA’s quarterly Bellwether Report.
The net balance of companies that cut their market research budgets – the difference between those reporting increased and decreased available spend – was -25.0% in the last three months of the year.
Over a third of companies surveyed for the report ( 36.4%) recorded a fall in research spend, while 11.4% noted an increase.
While the contraction in research budgets is not as marked as the Covid-19 lows of the previous two quarters, the results indicate that available spend for market research has been declining for over five years.
Companies also provisionally indicated that they plan to cut market research spend further, with a net balance of -4.7% planning to decrease budgets in 2021/2022 compared with 2020/2021, according to the report.
The contraction in research budgets has been recorded against a backdrop of further reduction in overall marketing spend – albeit, again, at a weaker rate than those recorded in the second and third quarters.
A net balance of -24.0% of panellists recorded a contraction in total marketing spend, with 40.4% reporting a decline and 16.4% noting a rise.
Panellists were pessimistic about industry-wide financial prospects as 2020 drew to a close, but with a net balance of -5.8% of firms expecting financial prospects to deteriorate, this was higher than the lows registered in the first three quarters of 2020.
There was also increased optimism from businesses regarding their own financial prospects, with a net balance of +18.1% more confident of improvement compared with three months ago (-3.9% in the third quarter).
The Bellwether Report, authored by IHS Markit, is based on a questionnaire survey of around 300 UK-based companies. Participants are primarily marketing directors and questionnaires are sent to companies in the last three weeks of each calendar quarter.
Looking to the year ahead, a net balance of +12.0% of participants expected their total marketing budgets to be upwardly revised.
Paul Bainsfair, director general at the Institute for Practitioners in Advertising, said: “We are still in the grip of the pandemic and the impact of Brexit is uncertain, with some marketers citing concerns regarding the potential for tariffs, and increased paperwork, delays and costs.
While the situation remains bleak for now, the Q4 2020 Report does, however, reveal significant promise of green shoots ahead. Budget plans for 2021/2022 are into positive territory. As the vaccination roll-out continues, as the lockdowns begin to ease and as firms adapt to post-Brexit rules, perhaps we can dare to ready ourselves for the roaring twenties after all.”
Eliot Kerr, economist at IHS Markit and author of the Bellwether Report, said: “Although advertising budgets continued to fall sharply at the end of 2020, it was promising that the rate of decline continued to soften following the unprecedented contraction during the second quarter. Firms are now looking forward to a recovery in domestic economic conditions, which will likely begin in the second half of 2021 as the UK’s coronavirus vaccination programme starts to take effect.”
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