NEWS17 October 2018

Marketing spend rises at weakest rate since 2015

Financials Media News UK

UK – Spend on market research was once again down in the third quarter of 2018, amid the weakest growth in overall marketing budgets in almost three years, according to the IPA’s Bellwether Report.

Marketing spend was up during the third quarter of 2018, yielding an overall net balance of +2.5%, but it was the weakest growth since the fourth quarter of 2015, dropping from +6.5% in Q2.

Against a backdrop of continued economic uncertainty over the outcome of Brexit, marketers were also less positive in their assessment of the financial prospects of both their own companies and the industry at large. Reviewing the wider industry’s outlook, the net balance fell to -21.0% from -9.0% in the second quarter – the highest level of negative sentiment since the fourth quarter of 2011.

The panellists’ outlook on their own companies did not fare much better: +5.7% were optimistic regarding their prospects, compared to +13.3% in the second quarter.

Digital marketing continues to dominate total budgets, with another quarter of strong growth for internet-based marketing evidenced by a +13.6% net balance of companies seeing upward revisions. Within that, marketers boosted spend on search/SEO (+5.8%) and mobile (+1.9%).

Budgets for market research remained in negative territory during the third quarter (-3.7%), but this net balance showed a slight improvement on the second quarter’s low of -7.2%. Marketers also noted downward budget revisions for events marketing (-1.1%), direct marketing (-7.4%) and ‘other’ marketing (-9.9%).

Spend on main media advertising (TV, radio, cinema) was largely unchanged from the previous quarter, at +4.9%. PR and sales promotion also recorded positive growth in spend.

Joe Hayes, economist at IHS Markit and author of the Bellwether Report, said: “Since the end of 2016, there has been a distinct slowing of growth momentum in UK marketing budgets. Latest Bellwether data revealed further sluggishness, as growing uncertainty towards the UK economy’s outlook as well as rising cost and competitive pressures impact companies’ discretionary spending. Over 60% of the survey panel observed no change in total marketing spend, highlighting indecisiveness and risk-aversion.”

However, he added: “Marketing executives are still being allocated greater expenditure, particularly in the digital space. Strong competition is driving firms to explore new innovative methods to bolster market shares and retain existing clients.”