The latest IPA Bellwether Report, covering the third quarter of 2014, has revealed that marketing budgets were revised up for the eighth consecutive quarter, and to the third highest level in the survey’s 14 year history, as companies “remain bullish” about the business outlook.
A net balance of +12.6% of companies registered an increase in budgets during Q3 2014. Although this is down for a second quarter running, the latest positive out-turn extends an already “unprecedented period” of growth, the reports states, as firms sought to take advantage of a positive trading environment and “bolster sales with high-profile and targeted marketing campaigns.”
In terms of actual spend, the Q3 survey marks the mid-point of the 2014/15 financial year and suggests that full-year marketing budgets are on course to be higher than those initially set earlier in the year, when marketing executives were at their most upbeat for seven years.
A net balance of +26.0% of companies recorded an uplift in their marketing budgets, relative to the 2013/14 accounting period.
Additionally, in line with upbeat economic data showing an increasingly positive UK business climate as companies invest more in brand building and expanding their sales, the Bellwether predicts an adspend growth of 7% in 2014.
However, with this growth, there is an increased chance of higher interest rates which the Bellwether predicts will slow growth. It therefore forecasts lower adspend growth of 3.8% in 2015.
The sharpest upward revisions to marketing budgets were made to internet (+14.5%) and main media advertising (+9.2%).
Within internet, search recorded a net balance increase of +9.4%, which, despite being the weakest since the Q4 2013 Bellwether survey, extended the current run of growth to 21 successive quarters.
Main media advertising was at the joint-third highest in the survey history, although down from 11.5% in Q2.
Events also recorded a marked upward revision to budgets, with a net balance of +7.8% and modest upward revisions were seen for direct marketing (+2.1%) and PR (+1%).
In contrast, there were reductions in budgets for sales promotions (-1.1%), market research (-1.7%) and other (-4.7%).
“Companies remain bullish about the business outlook, ratcheting up their marketing spend once again and adding to prospects of the economy continuing to grow strongly as we head towards the end of the year,” said Chris Williamson, chief economist at Markit and author of the report.
“The third quarter upward revision to marketing budgets was the third largest recorded since the survey began in 2000, exceeded only by the upward revisions already seen in the first two quarters of the year.
“This represents a remarkably positive picture of companies gaining confidence about the economic outlook as the year has proceeded, ploughing more money into budgets that had already been set higher at the start of the year. At this rate, 2014 is panning out to be the best year for growth of marketing spend in the survey’s 15-year history.”
