Bellwether: marketing budgets set to grow despite Omicron variant
The IPA published its quarterly Bellwether Report today indicating a growth in marketing budgets but lower spend intent and business confidence due to Omicron-related issues.
While marketing budgets grew in the fourth quarter and are predicted to expand again next year, rising inflation and supply-chain problems have dampened predictions on the extent of budget growth and industry optimism.
Paul Bainsfair, IPA Director General, commented: “It is very welcome news that UK marketing budgets continue to be revised upwards. As we can see, however, Omicron has heightened uncertainty, altered consumer behaviour and subsequently impacted UK companies’ marketing budget decision making.”
He predicted that new variants with accompanying inflation and supply chain issues “may indeed induce further wobbles” such as in Q4 2021.
Bainsfair added that investment in longer-term brand-building media was “the key for businesses to weather these fluctuations” as evidence showed brands that continue investing in most difficult periods “come out on top”.
More companies planning to increase budgets than cut them
However, the Q4 2021 survey did find more planning to expand rather than cut marketing spend in the next financial year.
A net balance of +34.5% of surveyed companies are planning to expand their total marketing spend and 45.7% were optimistic of budget growth, compared to11.2% expecting spending cuts.
Additionally, a net balance of +19.0% of companies surveyed expected higher events budgets, +17.9% plan to spend more on sales promotions and +17.4% on “big ticket” main media marketing like TV and radio.
Market research was the highest-performing budget section in the survey with a net balance of +7%, showing businesses endeavouring to understand the pandemic’s effects on consumer habits.
This is its strongest performance since it was first measured more than nine years ago.
Louise Ainsworth, CEO EMEA at Kantar’s media division, said: “It’s absolutely crucial to understand people’s new essentials and what they’re willing to carve out disposable income for in this time of flux. The jump in market research spend reflects that. Timely, relevant data and insight remain vital to planning and executing effective campaigns as we emerge from the grips of Covid.”
There was net balance growth of +3.8% in direct marketing and within main media advertising, video was at +7.3% and other online advertising +4.5% while published brands, audio and out-of-home experienced budget cuts of -5.9%, -6.3% and -8.3% respectively.
Events and other marketing budgets also registered experienced the worst cuts last quarter with -3.9% and -11.2%.
The Bellwether Report is researched and published by IHS Markit based on a survey of 300 UK marketers representing key business sectors mostly from the country’s top 1000 companies.