The Drum Awards for Marketing - Entry Deadline

-d -h -min -sec

Advertising Bellwether IPA

UK online ad spend hits 4-year high but future budget forecasts remain ‘uncertain’ thanks to Brexit, says IPA

Author

By Rebecca Stewart | Trends Editor

April 18, 2017 | 5 min read

An ongoing shift towards digital marketing has again been highlighted in the latest edition of the IPA’s quarterly Bellwether report, with growth to the number of marketers increasing internet ad spend hitting a four-year high.

uk ad spend brexit

Bellwether predicts a stagnation in ad spend in 2018

During the first three months of 2017 a net balance of 16.9% marketers said their online ad spend had risen, marking the most notable growth in just under four years. The figure was also significantly higher than it had been in the final quarter of 2016 when it sat at 12.1%.

Overall, 11.8% of 300-something companies questioned noted an increase to their budgets in the first quarter of the year, down from the 2016 Q4 figure of 12.9%.

The IPA’s numbers feature original data drawn from a panel UK marketing professionals. The figures are calculated by noting the percentage of respondents showing an improved revision to their marketing budgets minus those that indicated a fall to reach a net balance.

In terms of forecasts, toward the end of last year UK marketers indicated a positive outlook, with a net balance of +27.6% of companies signaling growth in their total budgets for 2017/8. The most recent study indicates this has dropped marginally to 26.1%.

In relation to Office for Budget Responsibility (OBR) forecasts that the value of the pound will rise by 2% this year, the IPA has predicted that wider ad spend will increase by 0.6% over the year as a whole; up from the 0.7% drop it had forecast at the end of 2016 for the year ahead.

The Bellwether report predicts a stagnation in ad spend in 2018, before growth recovers in 2019 and 2020 to rates of 1.8% and 2.3% respectively. However, given the difficulties in trying to predict the effects on the economy of Brexit negotiations and subsequent UK departure from the EU in 2019, current forecasts remain especially uncertain.

Paul Bainsfair, director general at the IPA said: “Once again the Bellwether shows that while the impact of Brexit remains uncertain, marketers are continuing to invest in marketing. Furthermore, despite the current, turbulent digital ecosphere, it is clear that marketers are attracted to the cost-effectiveness of digital advertising and its ability to reach and accurately target their consumers.”

Recent data from YouGov and The Chartered Institute of Marketing (CIM) indicated that 55% of UK marketers said Brexit was a top concern for the year ahead. A separate study from from AA think-tank Credos noted that less than 25% of the UK’s advertising agencies believe Brexit will offer opportunities for international growth.

Paul Smith, senior economist at IHS Markit, which conducts the IPA’s Bellwether research believes the key question for marketers is whether the resilience in spend shown post EU referendum can be maintained. “At present, marketers seem confident, with both sentiment around their own company financial prospects and budgets for the year ahead remaining inside positive territory,” he said.

“But perhaps reflect of the relative limbo we find ourselves in ahead of the start of negotiations between Britain and the EU, degrees of confidence remain historically low and panellists continue to note plenty of threats to the outlook.”

Earlier this year, some analysts predicted that concerns from advertisers over transparency and brand safety would squeeze digital budgets, but despite a turbulent start to 2017 the latest Bellwether report indicates this isn't the case.

Gavin Stirrat, managing director at performance marketing firm Voluum said it was "positive" that 41% of marketers expect to see an increase in their budgets in the coming financial year.

"The increase in mobile spend reflects the growing importance of this touchpoint, with brands now recognising that mobile is no longer a second screen," he added, "but in most cases is the first screen and the device that consumers engage with most regularly."

"It is however likely that a significant proportion of mobile spend is coming from mobile first brands on a performance basis, and a comparatively low share is coming from the big global brands, particularly when it comes to in-app advertising. And that’s despite apps now representing 20% of consumer media time, across all channels."

Advertising Bellwether IPA

More from Advertising

View all

Trending

Industry insights

View all
Add your own content +