IPA Bellwether: UK marketing budgets feel the strain
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Marketing budget growth has stalled according to the latest IPA Bellwether report – largely due to “challenging” market conditions.
Underlying sales were reported in some instances to be “a little softer” than in previous quarters, whilst investment funds were being directed away from marketing to other business areas.
The survey, produced each quarter, shows that 22.9% of companies benefited from an increase in their marketing budgets during Q1, compared to 17.9% of companies that recorded a fall. The resulting net balance of +5.0%, down from +8.6% in the previous quarter, was the lowest recorded by the survey for two years.
However, encouraged by positive returns from previous digital marketing campaigns, panellists interviewed for the report continued to boost their adoption of internet advertising.
The Q1 survey results indicated that internet marketing spend was raised for a thirty-fifth successive quarter at the start of 2018, albeit at a slower rate.
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Within this category, search/SEO expenditure also grew at a slower rate, while there was a “stagnation” in mobile advertising.
Elsewhere, marketing executives continued to “reap the rewards” of direct engagement with clients by increasing events marketing in the first quarter of 2018. Budgets in this category have now been raised continuously for four-and-a-half years.
Meanwhile, campaigns related to TV, radio and cinema, slipped into negative territory during Q1 2018.
“The ongoing slowdown in marketing budget growth comes as little surprise in the context of the challenging business environment and disconnect in recent surveys between budgets and subdued financial prospects,” said Dr Paul Smith, director at IHS Markit and author of the Bellwether Report.
“Rising costs and the ongoing uncertainty that exists over the future direction of the UK economy in a post Brexit world have led to caution and belt-tightening across a number of sectors, especially those more exposed to retail and consumption.
“Despite losing clear momentum since last summer, the positive news is growth is being sustained meaning the longest bull-run in the survey history continues. Whether this can carry on remains to be seen. Although the latest survey shows anticipated growth in 2018/19, the degree of optimism is the lowest in five years.”
