NEWS22 April 2020

Market research spend hit hardest during Covid-19 cuts

Covid-19 News UK

UK – Market research has taken the biggest hit amid the fastest decline in overall marketing spend since the financial crisis, the quarterly Bellwether Report has found.

Spending on market research saw the biggest reduction of all the categories in the survey, with a net balance of -21.0% of marketers reporting a drop in research budgets during the first three months of the year (compared with -13.2% in the last three months of 2019 ).

Market research budgets, which include qualitative and quantitative, brand tracking, and product development research, have been on a downward trajectory since the third quarter of 2015.

With emergency measures to prevent the spread of Covid-19 causing a decline in consumer and business spending, companies have reined in marketing spend. Total marketing budgets experienced the strongest quarter-on-quarter fall since the end of 2009, according to the report.

A net balance of -6.1% of marketers surveyed revised their total marketing budgets down, with a quarter ( 25%) noting a budget cut and 18.9% recording an increase.

None of the marketing categories studied saw growth in their budgets, with main media advertising recording the sharpest downward revision since 2009 with a net balance of -9.9. Direct marketing (-6.6%) and sales promotions (-7.2%) saw the slowest reductions, while public relations and events were hit harder (-14.3% and -15.9% respectively).

The report, produced by IHS Markit on behalf of the Institute of Practitioners in Advertising (IPA), is based on a questionnaire survey of 300 UK-based companies. The latest data was compiled between 2nd-27th March.

Looking beyond the current environment, marketers appear optimistic for a quick economic recovery, with a net balance of +16.2% of companies expecting to increase their spending on marketing over the next year. However, the outlook for spend on market research in 2020/2021 was still negative, at -0.6%.

Paul Bainsfair, director general, IPA, said: “The Q1 results already reveal a sobering snapshot of the initial impact of Covid-19 on UK businesses’ marketing decisions despite fieldwork for this quarter’s Bellwether Report closing just a few days after government enacted the lockdown. These are undoubtedly the toughest overall trading times that any business and indeed any marketer will have ever experienced, but while we suspect the fuller, sharper extent of this global pandemic to be captured in Q2 data, the hope from this report is that we will see a more upbeat end to the year.”

@RESEARCH LIVE

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