UK marketing budgets were revised up by the smallest amount for almost three years in Q4 2015; however, the latest IPA Bellwether figures signal a positive outlook for the year ahead.
While now in the 13th successive quarter of growth, a net balance of just +0.5% of companies registered an increase to their budgets during Q4 2015, down from +4.4% quarter on quarter – the lowest upward revision in 11 quarters.
Optimism regarding marketers’ own financial prospects and their wider industries also remained relatively subdued in Q4, which the report says reflects the softening in the rate of UK economic expansion in the second half of 2015.
A net balance of +20.4% of companies indicated they had grown more optimistic about their own prospects compared to three months ago, down from +22.4% in Q3 and the lowest recorded level in 11 quarters. The net balance for wider financial prospects was +7.0% – little change from +6.8% reported in Q3.
Despite easing confidence over the quarter, UK marketers have indicated a positive outlook for their 2016/17 budget plans, with a net balance of +24.6% of companies signalling growth in their total budgets for the coming year.
Equally positive, and in spite of geopolitical instabilities, potentially higher interest rates and uncertainty over Brexit, Bellwether forecasts a steady expansion of 3.9% in UK adspend growth in 2016.
By sector:
– Internet marketing recorded the strongest upward revision to budgets of all the Bellwether categories at +6.9%, although this is down slightly on Q3’s +7.8%.
Within internet, spending related to internet search/SEO also showed a robust performance in Q4 recording a net balance of +5.8%, up from +0.6% in Q3.
– Main media recorded some growth (+1.1%) which extends the current period of expansion to two years.
– Also showing marginal increases were PR (+0.6%) and events (+0.6%).
– Declines were, however, recorded for ‘other‘ at -12.1%, sales promotions (-7.7%), market research (-7.3%) and direct marketing (-1.7%).
“Marketing budget growth eased again in the final quarter of the year, slipping to a near three-year low in line with the softer UK macroeconomic environment that has been evident over the second half of 2015,” said Paul Smith, senior economist at Markit and author of the Bellwether report.
“Moreover, as has been the case in the post financial-crisis world, companies are maintaining a keen sense of cost-consciousness and a value-for-money approach to their marketing budgets. Such forces have probably weighed on growth in the final quarter of the year.
“However, given that the current run of expansion now extends to over three years, by far the best in the 16-year survey history, our gaze remains firmly fixed on the positive aspects of the survey especially the marked upturn in budgets planned by marketing executives for 2016/17.
“We therefore wait to see if Q4 2015 proves to be a nadir in the current cycle or whether we have a little way to go before we again see a sustained upward trajectory in Bellwether.”
