IPA Bellwether: largest upward revision in over 14 years
The Q1 2014 IPA Bellwether Report, released today, reveals the largest single upwards revision to marketing budgets in 14 years of data collection, marking the sixth successive quarter that marketing budgets have been revised up. Overall the 2013/14 financial year saw budgets increased to the greatest degree for seven years.
The report, which has been conducted on a quarterly basis since 2000, revealed a net balance of +20.4% of companies registering an increase in budgets during Q1 2014, up sharply from Q4 2013’s +11% and the previous survey record of +12.3% in Q3 2013.
The sustained period of upward revisions meant that the 2013/14 financial year proved to be positive for marketing executives with a net balance of +17.2% of companies reporting that their budgets had been increased.
This proved more positive than companies were forecasting at the start of 2013 when a net balance of +13.5% of companies were anticipating budget growth and marked the first net increase in budgets over the year for the first time since 2006/07.
The report’s authors also said that companies also remained “upbeat” regarding their own financial prospects with the net balance of firms that have become more optimistic remaining historically high at +41.7%, although this is slightly down from +47% in Q4 2013.
Meanwhile, the net balance for wider industry financial prospects rose to a new survey high of +39%, up from +35.4% in Q4 2013.
This optimism, which reflects the wider UK economic outlook, looks set to grow further with provisional data for the 2014/15 financial year revealing a net balance of +26% of companies expecting to see growth, the best recorded by the survey for seven years.
Additionally, the Bellwether Report’s predictive model, which is based on the Office for Budget Responsibility’s forecasts for the UK economy, indicates a “slightly more bullish” projection for GDP of 3%, which in turn is set to result in a real-term increase in adspend of 4.7% in 2014 and 3.5% in 2015.
By sector
All categories registered upwards revisions, with main media advertising being the primary beneficiary of the uplift, recording a series record net balance of +11.7%.
It also supplanted internet advertising as the best performer of all categories for the first time in just under three years and indicated a “growing confidence and willingness” amongst marketing executives to commit to high profile campaigns. (Main media advertising: +11.7%; Internet: 8.5% and within Internet, search: +13.9%; events: 6.2%; sales promotions: +3.4%; other +2.8%; direct marketing +2.6%; PR: +2.1% and market research: +1.1%.)
“With confidence remaining strong, forecasts revised up higher than ever before, and budgets being increased to the highest degree for seven years, the Q1 2014 Bellwether Report reveals that both the advertising industry and the wider economy are facing a future full of opportunity, innovation and most importantly of growth,” said Paul Bainsfair, director general, IPA.
“This is a very good place to be. All very good news for the Government in the run-up to an election year.”
Chris Williamson, chief economist at Markit and author of the IPA Bellwether Report, added: “The spring Bellwether Report reveals the most upbeat assessment of business and marketing spend that we have seen since starting the survey back in 2000. Last year saw the biggest rise in marketing spend since 2006, and 2014 looks set to be even better.
“If the initial increase in budgets for the year being the strongest since 2006 wasn’t already enough, the fact that companies have already revised these budgets higher to an extent not seen in the 14-year history paints a remarkably buoyant picture for the rest of 2014.
“Companies are ramping up their markets and advertising expenditure in the face of growing optimism about the economic outlook. As higher marketing spend is also usually accompanied by rising business investment and job creation, this augurs well for economic growth to top 3.0% this year.”