NEWS18 July 2018

Slight improvement to marketing spend as research budgets decrease

Brexit Data analytics Media News Trends UK

UK – Continued increased internet marketing spend is improving overall growth in marketing budgets in Q2, but spend on market research is down on the first quarter, according to the IPA’s latest Bellwether report.

Marketing spend has grown modestly during the second quarter, boosted by a strong upward revision in internet spend, with 23% of panellists indicating higher budgets for overall marketing activity, yielding a net balance of +6.5%, up from the two-year low of +5.0% recorded in Q1.

Market research spend, however, has been reduced in the last quarter, recording a net balance of -7.2% compared to -3.1% in Q1. The last quarter marked the lowest spend since Q1 of 2017, according to the IPA, marking 12 quarters of contraction for research budgets. The outlook for market research budgets for the next 12 months is also mildly pessimistic, with a net balance of -2.8% expected.

Direct marketing, PR and ‘other’ categories also experienced downward budget revisions. 

The strong upward revision in internet advertising from +8.7% in the first quarter to +22.7% marks nine years of consecutive growth in spend for the category. Main media advertising, including TV, radio and cinema, also grew slightly with a positive net balance of +4.9%, while events and sales promotion also had their budgets boosted.

Joe Hayes, economist at IHS Markit and author of the Bellwether Report, said: “Despite the pickup in marketing budget growth, the latest pace remains weak and only slightly greater than Q1’s two-year low. That said, at a time when industry-wide financial prospects are deteriorating, the continued increase in advertising spend offers a positive development.

“However, latest growth is partly defensive in nature. Margins are being tested by increasing competition and firms are raising budgets largely to sustain market share and profits. Since the forecast for the 2018/19 financial year made last quarter which indicated the lowest growth in total marketing budgets for five years, the impasse in Brexit negotiations, combined with panellists’ reports of rising costs, provide clear downside risks to spending available to marketing executives.”

@RESEARCH LIVE

0 Comments