IPA Bellwether: marketers cautious but positive, 40% expecting budget growth in 2023
Latest quarterly report shows net balance up 2.2% after a fifth of companies upped their marketing budget in Q4, marking the seventh consecutive quarter of growth.
Marketing budgets set to grow in 2023 says IPA Bellwether / Pexels
Nearly 40% of UK marketers expect budgets to grow in 2023/2024, despite the economy teetering on the edge of recession, according to the latest IPA Bellwether Report. 45% will maintain their budgets and around 15% expect a decrease.
The latest quarterly update suggests marketers were cautious but optimistic in Q4 of 2022, with a similar outlook for the year ahead. This is a big shift from Q3 last year when the IPA found financial confidence at its lowest level since Q2 2020.
Optimism is palpable across all marketing categories for the year ahead, with the biggest increase in marketing spend expected in the events industry, with a forecasted +18% net balance.
Meanwhile, main media marketing is set to be bolstered with a net balance of +13.4%, while budgets for direct marketing, PR and other marketing activities are also set to marginally increase, despite a drop in spend between Q3 and Q4 of 2022.
The surprisingly cheery outlook for the coming year comes after over a fifth of companies (20.2%) upped their marketing budget in the final quarter of 2022 and 18% cut spend. The net balance for the IPA’s latest quarterly report was up 2.2%, which marks the seventh consecutive quarter of growth.
It appears companies have managed to hold their nerve through the economic downturn and have listened to advice from the ad industry to continue spending. Companies in the survey revealed a fear of losing market share led them to maintain or up their spend.
“Given the immediate outlook for the UK economy has deteriorated since the previous Bellwether Report, this quarter’s results are most welcome,” commented the trade body’s director general Paul Bainsfair. “While understandably cautious, they are nonetheless in positive territory.”
The events industry also had the highest budget growth in Q4 2022, +5.7% from +4.5% in the previous report, while publishing and out-of-home declined by -7.3% and -1.2% respectively. Main media bounced back in Q4, up to +4.4% from +3.1% in Q3, video was +13.7% against Q3’s +8.7% and online was marginally down at +6.3% versus Q3’s +9.3%.
Direct marketing and PR faced marginal cuts with a net balance of -0.6% and -1.9% respectively.
Recession and cost of living crisis rage on
The cost of living crisis is still a major concern for marketers, with the latest inflation figure at 10.7%. Companies said they were concerned about consumer spending cuts, squeezed margins and the continuing supply shortage. Many companies said they would take a proactive approach to take market share from more weary competitors.
The UK economy managed to narrowly avoid slipping into recession in 2022 after the economy grew by a meager 0.1% in November partly due to the World Cup. However, economists still anticipate the UK to enter a recession in early 2023, with forecasts it could last till the summer.
Harriet Durnford-Smith, the chief marketing officer at Adverity, said of the economic outlook: “With recession forecasts almost changing by the day, a confusing financial picture isn’t surprising. Optimistically, we could take continued budget growth – and expectations of further rises this year – as proof that marketers are determined to keep investing, despite the gloomy assessment of economic prospects for their own companies and sectors... It’s likely, however, that many teams are still on track for cuts.”
Meanwhile, Richard Kelly, chief revenue officer at Mindshare UK said: "While there is optimism in the report, we need to acknowledge that growth in ad budgets and the wider economy will be slow. Brands and agencies will need to continue to work in partnership to maintain positive momentum, and to actively drive good growth during uncertain times."