UK Marketers More Cautious, Says IPA Report

In the UK, total marketing budgets rose during the third quarter of 2018, although slower than in previous quarters, according to the IPA Bellwether Report, published today. Market Research was one of relatively few areas where more people reported a decline in spend than a rise.

Headline figures are produced by deducting the percentage of respondents saying budgets have fallen from the percentage saying they have risen, producing a rough and ready picture of what's happening to overall spend. It's now six years since the survey recorded a net negative in this main indicator, but this quarter's figure is the lowest since before the EU Referendum.

Just under 21% of panel members revised total marketing budgets upwards in Q3, and around 18% downwards, giving an overall net balance of +2.5%. This is the lowest figure since Q4 of 2015, and significantly down on the +6.5% recorded in Q2.

As ever, or almost ever, Internet-based marketing showed a strong net balance - in this case 13.6% - but perhaps surprisingly mobile marketing budgets grew very little on this measure, with a net plus of just 1.9%. By comparison, the report says marketers 'were again given more discretion over spending plans on large scale marketing campaigns, such as those relating to TV, radio or cinema': the net balance figure for 'main media advertising' was +4.9%, little changed from +4.8% in Q2.

Net negatives were recorded for events marketing (-1.1%), market research (-3.7%), direct marketing (-7.4%) and 'other' marketing (-9.9%).

Panellists are also asked about their assessment of financial prospects for their own companies and then for their industry as a whole. A net balance of +5.7% were optimistic about the former, down from +13.3% in Q2 and the lowest figure in six years. On the latter, pessimism was more marked: the net balance fell in Q3 to -21.0%, from -9.0% in Q2 - the worst score since Q4 2011 which plumbed the depths at -44.9%.

The report predicts a rise in adspend for 2018 of 1.1%, and for 2019 of 0.7%, citing the lack of clarity over the UK's future relationship with the EU after Brexit, alongside rising cost pressures, as factors holding it back. It expects momentum to pick up between 2020 and 2022, apparently assuming that the same uncertainty won't still be going on then.

Paul Bainsfair, Director General of the IPA says caution is inevitable in the current uncertain climate, but opines: 'we must take some solace in the fact that investment in main media spend is fairly constant quarter-on-quarter. As the evidence shows, main media is the most effective route to building brands'.

The report is written by Joe Hayes, Economist at IHS Markit with whom the IPA conducts the study. Details, including pricing, are at www.ipa.co.uk/page/ipa-bellwether-report .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.