Despite P&G and Unilever continuing to heavily scrutinise the value of their online media buys, investment in digital has helped wider UK ad spend rebound from a two-year low.
Acording to the latest Bellwether report from the Institute of Practitioners in Advertising (IPA), 23% of marketers said they had higher spending plans for overall marketing activity in the second quarter of the year. Elsewhere, 17% said they had lowered budgets, which results in a net balance of +6.5%.
The figure was an increase on the 5% net score reported in Q1 of 2018, which had been the lowest since Q1 2016, however despite some signs of a bounce back it’s still the second lowest reading to have come back in the past two years.
The IPA's quarterly report, which features original data drawn from a panel of around 300 UK marketing professionals from the UK’s top 1000, firms has also upwardly revised its UK ad spend forecast for 2018 – increasing it to around 1.1% from its prediction of 0.8% last quarter.
While slow, the boost to overall ad spend growth has been fuelled in part my “relentless” upwards revisions to internet budgets.
UK marketers were found to have revised their internet budgets up to their joint strongest levels in over a decade. A net balance of 22.7% of marketers reported upward revisions to their digital budgets. The level is not only up from Q1’s reading of 8.7%, but is also the highest it’s been since Q3 2007.
For instance, P&G recently said that by the end of the year it will have slashed the money it spends on "wasted media" by 50%.
However, the increase indicates that collective efforts to clean up the digital supply chain might be easing concerns.
Michael Todd, head of advertising industry relations, Google EMEA said the numbers show that digital formats act as a “booster” for the industry.
He added: “Despite the ongoing uncertainty around Brexit, the UK continues to drive forwards in advertising and demonstrate its role as a global leader in the industry.
“Our ability to shake off uncertainty and focus on producing outstanding creative work and excellent results is reflected in the rise in marketing budgets, and the upward revision of the 2018 forecast. The latest report is encouraging and affirms that we are, as an industry, moving in the right direction.”
Main media advertising – which includes TV, radio and cinema – also showed more bullish growth than last quarter. While still not as high as digital the net balance was positive overall with 4.9% of marketers saying they were upping spend in these mediums.
Simon Harwood, head of strategy at independent media agency the7stars said it was encouraging to see marketers reinvesting in traditional brand-building media, taking advantage of events like Love Island and the World Cup.
“During uncertain times there’s always a temptation to increase investment in short-term activation channels, so the continuing growth in internet spend is relatively unsurprising,” he said.
“In climates like these dynamic and responsive decision making is needed, as well as an examination of the evidence available to inform future strategies. However tempting, it’s unwise to over-spend in activation channels that deliver cash flow in the short-term but hinder profitability further down the line.”
Thanks to the new General Data Protection Regulation (GDPR) rules, budgets available for direct marketing were revised even lower in the second quarter of the year with the latest -3.2 net balance marking a third-consecutive year of decreases for the channel.
Regarding UK marketers’ financial confidence, the report shows that company financial prospects remain upbeat, but wider industry prospects are to deteriorate further.
Businesses maintained a positive outlook towards their own finances during the Q2, with a net balance of +13.3% of firms saying they were ‘optimistic’, fractionally higher than in the first quarter (+13.1%) and the greatest level of optimism since Q1 2017.
Confidence towards wider industry financial prospects was lacking however, amid a recent softening in UK economic growth and the ongoing impasse in Brexit negotiations, with a net balance of - 9.0%, albeit up from -13.6% in the last quarter.