NEWS17 April 2019

Marketing budgets boosted but forecast negative

UK – Market research budgets have remained lower in the first quarter of the year, with overall marketing budgets seeing an uptick despite Brexit uncertainty, according to the latest Institute of Practitioners in Advertising (IPA) Bellwether report.

Jar of money labelled 'budget'

The net balance of marketers reporting lower market research budgets had barely changed from the last quarter of 2018 and remained negative (-4.2% compared to -4.7%).

Fewer than one in ten marketers ( 9%) indicated they would be spending more on market research, with 91% either reporting cuts or no change to their budgets, and the forecast for research remained gloomy, with a net balance of -4.0% expecting further cuts in 2019/20.

Marketing budgets as a whole, however, were revised up to +8.7% in the last quarter – their highest level since Q3 2017 and a sharp increase from +0.0% in Q4 2018. Of the marketers surveyed for the report, 21.6% observed spending growth and 12.8% registered cuts.

Joe Hayes, economist at IHS Markit and author of the Bellwether Report, said: "A return to growth in marketing budgets may come as a surprise given that the uncertainty that shrouds the UK political and economic climate has only built further since the previous Bellwether Report. However, some companies began to show a determination to step up brand-building and protection in these challenging times, taking a pro-active, yet defensive approach in the face of business belt-tightening and weakening consumer confidence."

Despite the uptick, companies were cautious in their forecasts for marketing spend in the coming financial year, with only +3.4% expecting budgets to grow in this period. This is the lowest level of expected growth since 2009.

While marketers’ assessment of the industry’s general financial prospects was slightly less negative than the previous quarter (-22.6% from -28.6%), they were also more pessimistic about their own company’s finances, with a net balance of -2.7% compared to -0.9% in Q4 2018.

Paul Bainsfair, director general, IPA, said: “This sharp increase following Q4 2018’s flatlining signals that UK marketing budgets have received a much-needed kiss of life in an economy gripped by Brexit uncertainty. The smart marketers realise that to grow their businesses, they must invest in them, particularly in mass reach, long-term media.”