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Bellwether Report

IPA Bellwether Report: Advertising budgets rise marginally in the quarter as marketers slip into a state of ‘flux’

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By Seb Joseph, News editor

April 13, 2016 | 3 min read

Ongoing economic, financial and political uncertainties have left UK marketers unsure as to whether they should stick or twist when it comes to their budgets, pushing them into a state of “flux”, according to a study.

The Bellwether Report, a quarterly survey of 300 senior marketers from the country’s top 300 companies, painted a glib picture of the short-term ambitions of many of those surveyed. Despite being the 14th successive quarter for growth, that rise was modest, with a net balance of 3.0 per cent of companies posting an increase to their budgets during the first quarter of the year, up from 0.5 per cent in the previous quarter. The latest quarter is a marked drop on the levels that have been posted over the last two and a half years.

The wariness that has gripped marketers was also reflected by low financial hopes. Sentiment about industry financial prospects slumped to the lowest level since the start of 2013, from 7 per cent to -6.5 per cent in the first quarter of the year. That concern was even more pronounced when companies assessed their own financial prospects, which dropped from 20.4 per cent in the last quarter of 2015 to 13.6 per cent this quarter – the lowest level since 2012.

More than a fifth (23.3 per cent of marketers expect the doom and gloom to fade soon, predicting their own budgets for 2016/17 to rise. Part of that confidence stems from the European football championships and Olympics, which are both marketing tentpole fixtures.

“The latest Bellwether survey leaves the impression that marketing executives are currently living in a period of flux,” said Paul Smith, senior economist at Markit and author of the Bellwether Report.

“On the one hand, economic and financial prospects have taken somewhat of a nosedive – probably not helped by uncertainty around EU membership – and that’s led to those holding company purse strings to adopt ongoing prudence and caution when committing funds to areas such as marketing.

“While this inevitably has led to downward pressure on budgets, steady sales flows are encouraging new product development and enabling marketing executives to eke out some modest growth in funds.”

Of all the marketing mediums assessed in the report, the internet (unsurprisingly) saw the biggest revision of budgets, posting a five-quarter high of 9.8 per cent, up from 6.9 per cent in the final quarter of 2015. Within internet, search/SEO also showed continued growth, at 2.8 per cent although this was down from 5.8 per cent the previous quarter.

"Internet spend saw its biggest upward revision for over a year last quarter,” said Paul Mead, founder and managing director of VCCP Media and chair of the IPA Search Group:

“This continues the positive trend we’ve seen through a remarkable 27 quarters, but, we’re seeing marketers broadening their mix as search matures and other platforms such as paid social become firmly established as core channels."

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