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IPA Bellwether: Marketing budgets see biggest surge in 14 years with traditional media outstripping internet spend for first time in 3 years

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By Jessica Davies | News Editor

April 17, 2014 | 4 min read

Marketing budgets have seen their biggest increase in 14 years, with almost 30 per cent of companies registering an increase in budgets during the first quarter of 2014, according to the latest IPA Bellwether Report.

This is markedly higher than the fourth quarter of 2013, during which only 11 per cent of companies listed an increase in marketing budgets, with12.3 per cent the highest for the whole of 2013. Nine per cent of companies registered a fall in marketing budgets, which, along with the 30 per cent that cited an increased, resulted in a net balance of a 20.4 per cent quarterly rise.

The Q1 2014 IPA Bellwether Report, published today (17 April), revealed the “record” increases completed the end of six consecutive quarters in which marketing budgets have been “revised up”.

Revisions to total marketing budgets

The sustained period of increases throughout 2013 and the first quarter of 2014 has resulted in marketing executives recording a net rise in budgets for the year - for the first time since 2006. An average 17.2 per cent of companies reported a budget rise - smashing previous annual forecasts.

Analysis of marketing budgets in Q1 2014

Rises were logged across all categories of marketing, with traditional media advertising seeing the biggest hike, outstripping internet investment in the first quarter of 2014, for the first time in almost three years. However, internet advertising budgets also saw a quarterly rise, although the net average spend dropped 8.5 per cent in the first quarter - down from 9.2 per cent in the fourth quarter of 2013. Paul Bainsfair, IPA director general said: “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. This is a very good place to be. All very good news for the Government in the run-up to an election year.”

Marketing executives’ business confidence

Meanwhile companies' overall optimism regarding their financial prospects was deemed "historically high" by the IPA, and that combined with recently published data on the recovery of the UK economy by the Office for Budget Responsibility (OBR), has led to 40 per cent of marketing respondents anticipating a further rise in marketing budgets. Chris Williamson, chief economist at Markit and author of the Bellwether report said: “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.”Based on the economic data flow for 2014, the IPA is forecasting an increase in UK GDP of 3 per cent for this calendar year - a figure it has described as more "bullish" than the current OBR projection of 2.7 per cent. Both consumer spending and investment are expected to rise at rates of 2.5 per cent and 8 per cent respectively.

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