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Mike Fletcher 

Cuts to UK marketing budgets deeper than 2008 global financial crash, says Bellwether

Cuts to UK marketing budgets deeper than 2008 global financial crash, says Bellwether

UK marketing budgets have been slashed to their lowest levels for 20 years, due to the devastating impact of the coronavirus, according to the Q2 2020 IPA Bellwether Report.

The Bellwether surveys around 300 UK-based companies and has published its results every quarter for the past two decades.

The second quarter of 2020 saw the net balance of firms who have cut their marketing budgets plummet to -50.7%, down from -6.1% in the first quarter. These figures supersede the report’s previous record low-point of -41.7% evidenced in Q4 2008, following the global financial crisis.

The net balance equates to almost 64% of survey respondents registering a decrease in spend, while only 13% posted an increase.

With coronavirus restrictions still prohibiting organised gatherings, funding for events marketing saw the sharpest reduction with more than 80% of respondents reporting a decrease.

The reduction in ‘main media’ advertising is the most severe since the Bellwether’s inception, with a net balance of -51.1% of marketing executives reporting a decline in available spend.

Underlying data within this ‘main media’ category cites the worst performing sub-category as out of home advertising (-61.2%). This was followed by audio (-50.0%), published brands (-49.2%), video (-39.3%) and other online (-35.1%).

Across each of the seven broad marketing types, direct marketing and public relations saw the joint-softest budget cuts in the second quarter, although with net balances of -41.6%, the downturns were still severe overall.

Meanwhile, market research (-42.2%), sales promotions (-51.2%) and other marketing expenditure (-59.2%) each saw historic reductions for their respective categories.

However, following a predicted -11.3% reduction in overall adspend for the whole year (providing a second wave of coronavirus doesn’t result in a second lockdown), Bellwether author, IHS Markit does anticipate a robust recovery.

For 2021, the London-based information provider predicts a +4.9% expansion in GDP and implied adspend growth of +6.0%. Beyond that, IHS Markit expects the economy to achieve above-average growth during a further recovery phase, before stabilising in 2024 and 2025.

Paul Bainsfair, IPA director general said: “While the future trajectory of the economy is unpredictable, that of brands starved of marketing investment is much clearer. Our evidence from previous recessions and periods of buoyancy consistently shows that cutting marketing investment weakens brands in the near-term and limits growth and profitability in the long-term.

“There are positive forecasts for a return to adspend growth in 2021 but a significant part of this coming to fruition hinges on the decisions companies make now. Ultimately, companies must invest in marketing during a recession in order to profit in a recovery.”

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