UK marketing budgets increase for first time in 18 months

The quarterly survey found that total marketing budgets increased at the sharpest rate since the beginning of 2019, with a net balance of +6.0% expanding their total marketing budgets during the second quarter. Around a fifth ( 21.2%) of panellists registered growth during the quarter, compared with 15.2% that reported a decline.

The Bellwether is based on a questionnaire of around 300 UK-based companies (primarily marketing directors or similar).

Budgets for market research were revised lower in the latest quarter compared with three months ago, with a net balance of -9.6% recorded. The survey found that 6.6% of companies increased market research spend, while 16.2% registered cuts.

However, companies were less pessimistic in their plans for research spend in the 2021/22 financial year, compared with budget revisions, with a net balance of -4.9% reporting that they expected to record cuts.

Public relations led the upturn in marketing spend, with a net balance of +1.8% of companies reporting increased spending, compared with -8.0% in the previous quarter.

A net balance of +1.3% increased their budgets for main media advertising, which includes TV, with growth in video, audio, and other online advertising. Published brands and out-of-home budgets were lower in the second quarter, with a slight uptick for direct marketing budgets, while sales promotions and events budgets were cut.  

The survey also found that +45.9% of panel members were more optimistic about their company’s financial prospects compared with the previous quarter, while +11.4% were pessimistic, with a resulting net balance of +34.6% suggesting a strong overall level of confidence.

Paul Bainsfair, director general, IPA, said: "These positive results mark the end of five quarters of continuous cuts. For revisions to UK marketing budgets to bounce back so quickly and strongly, following their nadir at the height of Covid-19 restrictions in Q2 2020, is very welcome news and corroborates our Bellwether prediction for a V-shaped recovery.

"As the vaccination rollout continues at pace and UK plc gears itself up for growth, we encourage companies to ramp up their advertising to make the most of post-lockdown, pent-up consumer demand."

Joe Hayes, senior economist at IHS Markit and author of the Bellwether Report, said: "The strongest upward revision to total marketing spend since the beginning of 2019 is a great indication that firms have grown confident towards economic prospects."