Companies in the UK have upwardly revised their marketing budgets at the strongest rate in over a decade and to the second highest level in almost a quarter of a century, according to the latest IPA Bellwether Report.
Rising from +9.4% in Q1 to +15.9% in Q2, the net balance of businesses that expanded their total marketing budgets was at its highest level since the first quarter of 2014 (when it measured +20.4%). This also marks the second-highest upward revision in the survey’s almost 25-year history. Additionally, the net balance has registered in positive territory in each of the past 13 quarters, signalling a sustained period of growth in UK marketing spend. While 14.0% of respondents reported budget cuts in the second quarter, this was half the proportion recording expenditure growth (29.9%).
Events continued to be the best-performing mode of marketing from a budgeting perspective, with another robust quarterly expansion during the latest Q2 survey period (net balance of +17.2%, from +23.1%), showing a strong appetite for in-person interactions with clients and prospects.
Direct marketing was also an area which continued to flourish, with budgets for this category increasing for a sixth successive quarter. The net balance of firms reporting upward revisions (+8.9%) also rose on the quarter (+7.0% previously).
Meanwhile, main media budgets, which include spending allocated for big-ticket advertising campaigns broadcasted on television and radio, returned to growth after a marginal reduction in Q1. The net balance of companies recording upward budget revisions was +3.5%, up from -0.7% previously. Granular data revealed the expansion was driven by other online (net balance of +15.3%, from +7.1%) and video (net balance of +7.8%, from +0.8%), as the remaining monitored categories either stagnated (out-of-home recorded a 0.0% net balance) or contracted. Indeed, audio (net balance of -5.5%, from -4.5%) and published brands (net balance of -6.3%, from -5.7%) registered slightly stronger decreases.
Elsewhere, sales promotions saw the third-strongest expansion in budgets, with the net balance of firms posting growth rising from +4.9% to +6.9%, a one-year high. Upward revisions to market research (net balance of +3.2%, from +1.4%) and PR (net balance of +2.6%, from +0.6%) rounded off a quarter of broad-based strength in marketing, as the -other’ category – which accounts for any other method of marketing not included – was the only part of the survey to register in contraction (net balance of -7.6%, from -4.3%).
Paul Bainsfair, Director General at IPA, commented: “In line with the brightening economy, decreasing levels of inflation and a new Government, this quarter’s Bellwether Report reveals real vim and vigour regarding UK companies’ marketing spend intentions. As we know, advertising is a lever for growth for companies and so it is great to see them capitalising on these developments.
“While we welcome this positivity, it is worth noting that while inflation levels have come down, this hasn’t yet translated into prices, and as such, strains on many household finances prevail. This is something we’ve seen in our recently launched 2024 IPA TouchPoints data where more than a third of consumers say they are struggling to cope on their current income. Companies would benefit from being cognisant of this in terms of their communications approach and messaging to their consumers. I suspect that those brands that can bestow their sense of value, trust and reward will fare well here.”
Joe Hayes, Principal Economist at S&P Global Market Intelligence and author of the Bellwether Report, added: “While a general election carries the potential to generate a lot of uncertainty and decision-making paralysis in its lead-up, it seems that UK companies in the Bellwether survey largely shrugged it off as a factor to consider when assessing their marketing budgets in the second quarter as growth jumped to a ten-year high.
“A strong performance by the UK economy so far this year, in tandem with falling inflation and the expectation of an imminent interest rate reduction by the Bank of England, has helped lift confidence, providing more fertile grounds for companies who wish to invest into their brands and position themselves for long-term growth.”
NAM Implications:
- Albeit an increase in marketing budgets…
- …the underlying trend appears to be increased promo/store-based…
- …at the expense of traditional media.
- i.e. the appeal of Retail Media and the use of first-party data appears to be growing…
