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Domino's Pizza Online IPA

Advertisers ‘shrug off’ uncertainties to reaccelerate ad budgets after confidence dip, says IPA Bellwether

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By Seb Joseph, News editor

April 16, 2015 | 4 min read

Advertisers have shrugged off the uncertainties they had about the economy at the end of 2014 and plan to ramp up their quarterly marketing budgets by the largest amount in eight years, according to a, IPA report.

The latest Bellwether Report of 300 senior marketers from the UK’s top companies reflects a more upbeat tone from the industry following a dip in confidence at the end of 2014. Advertisers, buoyed by their own financial prospects and those of their industries, were quick to lift spend with a net balance of 11.8 per cent posting an increase in the first three months of the year, up from 6.4 per cent the previous quarter.

More than a third (37.8 per cent) of respondents are more buoyant about their own financial outlooks for the year compared to 30.7 per cent in the previous quarter. The net balance for wider industry financial prospects jumped from +16.2 per cent in the last three months of 2014 to 26 per cent at the start of the year.

The positive outlook is tipped to stay for the rest of the year with more than one in five (28 per cent) of respondents planning to raise their budgets for the rest of the year. It is backed by signs of a strengthening macroeconomic climate, as shown by a real-term increase in UK ad spend of 4.2 per cent in 2015, according to the study.

Paul Bainsfair, IPA director general, said: “With over 10 successive quarters of growth in marketing budgets and the best budget year for marketing spend in a decade, this latest Bellwether provides welcome evidence of the extent to which clients recognise and value the significant contribution marketing communications makes to their business success. This stands us in good stead for what is set to be an unsettled few months politically.”

While events, TV and press are predicted to be the largest beneficiaries of the upturn in spend, internet budgets posted the biggest leap in the first quarter. The resulting net balance of 8.4 per cent continues the channel’s growth for 23 consecutive quarters, although it was the lowest increase in just over two years and down from a six-quarter high of 15.1 per cent lift in the previous quarter.

Nigel Gilbert, vice president of strategic development for EMEA at AppNexus, said:

"As digital increasingly permeates every aspect of people’s lives and becomes the space where meaningful interactions take place, it is unsurprising that internet ad spend continues to grow. Marketers are evermore reliant on the internet and the technology that powers it to find the most efficient and effective ways to engage with the always on, multi-screen, mobile consumer. Increasing investment in the internet is continuing to fuel the growth of programmatic advertising while supporting the future of publishers looking to monetise their digital platforms.”

Domino’s is one such company that is changing how it invests its marketing to navigate the fragmenting online landscape.

Simon Wallis, sales and marketing director for the pizza business, said: "We’ll continue to invest in our software development and will continue to do a lot of that in-house. We’ll also continue to invest in media and that’s across all channels. I often get asked ‘why do you continue to invest in TV’ when 70 per cent of our delivery business is done online. But we need to go and fill the bucket and attract people to the brand [through TV] and then we use our digital channels to convert that demand as efficiently as possible.”

Event budgets were revised higher in the period with a net balance of 5.7 per cent, extending a year and a half period of growth, while main media is expected to rise for the fifth consecutive quarter (2.9 per cent) although at a much lower rate than the 6.7 per cent in the fourth quarter.

Paul Smith, senior economist at Markit and author of the Bellwether Report, said: “Already coming off the best annual performance in a decade, growth looks highly likely to be extended into a third year in 2015/16. Accordingly we are predicting a strong real-term increase in UK ad spend over 2015 as a whole.”

The trend is indicative of the wider, global advertising habits of companies that is seeing them invest more in removing non-working media from their strategies as they increase budgets in search of growth.

Domino's Pizza Online IPA

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