Despite uncertainty over Brexit, marketing budgets were revised up in the third quarter of 2016 to the highest rate in over two years, according to the latest Bellwether report from the IPA.
However, despite positive revisions to budgets, the uncertain economic and political climate meant industry financial prospects remained negative.
A net balance figure, calculated by subtracting the percentage recording a downward revision from the percentage recording an upward revision, shows financial prospects fell to -12.1%. That figure is down from -8.1% and the third successive reading below zero. This was also the lowest recorded by the survey since Q4 2012.
Panellists were, however, a little more optimistic about their own company financial prospects during Q3. Over 31% of panellists have grown more optimistic, compared to less than 21% that indicated a more pessimistic tone, resulting in a net balance of +10.6%. However, that was down from +13.7% in the previous quarter and the lowest recorded by the survey since Q4 2012.
Reflecting the overall upward revision to budgets, yet decrease in confidence, Bellwether has updated its forecasts for adspend in 2016, and now predicts some “modest growth” for the year as a whole (+1.9%).
This is up from the Q2 Bellwether prediction of -0.2% growth and in line with expectations for a more robust UK economic performance following the initial shock to activity from the EU referendum vote.
Bellwether does, however, predict that 2017 is set to be a more “challenging year”, with adspend expected to decline by -0.7% as business investment is pared back in line with the uncertainty over the negotiated terms of the UK withdrawal from the EU.
This is expected to also weigh on consumption, with higher prices from the depreciation of sterling set to reduce household purchasing power and also undermine spending.
Adspend is set to show modest signs of recovery in 2018 with Bellwether projecting growth of +0.2%, followed by a return to more solid expansion in 2019 (+2.4%) and 2020 (+2.7%).
