Marketing budgets were revised marginally higher in Q1 2016, marking 14 successive periods of growth; however, confidence regarding wider industry financial prospects dipped, in line with growing concerns over the macroeconomic climate including Brexit, weak global economic growth and ongoing Government spending cuts.
The latest IPA Bellwether Report, published today, revealed a net balance of +3.0% of companies registering an increase to their budgets during Q1 2016 up from +0.5% in Q4 2015, although down on the levels seen throughout much of the preceding two and a half years.
Sentiment about industry financial prospects dropped to the lowest level since the start of 2013, from +7% in Q4 2015 to -6.5% in Q1 2016.
Optimism regarding companies’ own financial prospects also slumped from +20.4% in Q4 2015 to +13.6% this quarter, marking the lowest level since late 2012.
In spite of a less optimistic financial outlook, marketing executives are still upbeat about their own budgets for the coming accounting year, with +23.3% forecasting higher spend in 2016/17.
As a result of these developments, Bellwether predicts adspend growth of 3.3% for 2016, a downward revision to the 3.9% in projected in Q4 2015.
“Following the referendum in June, the summer Bellwether should hopefully provide better clarity on where we are headed,” IPA director general Paul Bainsfair said.
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“On balance some growth seems the most likely outcome especially with the European football championships and Olympics set to provide a shot in the arm to budgets in the immediate months ahead.”
By sector, Internet marketing once again saw the strongest upward revision to budgets of all Bellwether categories, recording a five-quarter high of +9.8% (from +6.9% in Q4 2015) and marking 27 quarters of continuous expansion.
Within internet, search/SEO also showed continued growth, at +2.8%, although this was down from +5.8% in Q4 2015.
“This continues the positive trend we’ve seen through a remarkable 27 quarters,” said Paul Mead, founder and managing director, VCCP Media and chair of the IPA Search Group. “But, we’re seeing marketers broadening their mix as search matures and other platforms such as paid social become firmly established as core channels.”
Events also saw a marked increase to budgets of +6.3% and main media recorded modest growth of (+1.7%).
Meanwhile, reduced spending was seen in sales promotion (-8.4%), direct marketing (-4.9%), ‘other’ marketing activities (-4%), PR (-4%), and market research (-3.1%).
