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Mike Fletcher 

Marketing decline slows again, says Bellwether

Marketing decline slows again, says Bellwether

The downward trend in UK marketing budgets has softened for the third quarter in a row, according to the latest IPA Bellwether report.

The report, published today is the surest sign to date that business conditions are beginning to stabilise after a year of turmoil.

A net balance of -11.5% of panellists reported a contraction in total marketing budgets during the first quarter of 2021. Although the rate of decline remained historically marked, it has eased substantially from the final quarter of 2020 (net balance of -24.0%).

Overall, just over a quarter (25.7%) of surveyed businesses saw a decrease in available ad-spend in the latest survey period, while 14.2% recorded an increase.

Unsurprisingly, restrictions related to Covid-19 continued to act as the main drag on marketing budgets, according to anecdotal evidence. Amid softer demand conditions and ongoing closures in some sectors, businesses mentioned cost-cutting programmes, which had weighed on ad-spending in the latest survey period.

Each of the seven monitored marketing categories saw a further decline in budgets at the start 2021, the sharpest of which was seen in Events, which are not due to restart until 17 May.

Although the net balance of firms reporting a contraction eased to -43.2% from -62.9% at the end of last year, the pace of reduction was among the quickest ever recorded.

Cuts to budgets were also seen in Market Research (net balance of -17.8%, up from -25.0% in 2020 Q4), Sales Promotions (-16.2%, from -26.5%), Other (-14.7%, from 29.6%), Direct Marketing (-11.8%, from -13.9%), Main Media (-8.2%, from -21.8%) and Public Relations (PR) (-8.0%, from -8.5%).

Underlying data for Main Media indicated that the decline in this category was driven by lower budgets for Out of Home advertising (net balance of -24.1%, from -36.7% in 2020 Q4), Published Brands (-22.2%, from -29.0%) and Audio (-9.0%, from -21.6%).

At the same time, Other Online spending budgets stabilised (0.0%, from +0.7%), while Video ad-spending returned to growth in the first quarter (+3.3%, from -3.5%).

Of the seven broad marketing categories, ad-spend expectations for the coming year remain strongest in Main Media Advertising, where a net balance of +10.1% of firms anticipate higher expenditure.

Marketing executives also anticipate a rise in budgets related to Public Relations (net balance of +7.4%) and Direct Marketing (+6.8%), while expectations were neutral regarding Sales Promotions (0.0%).

Eliot Kerr, economist at IHS Markit and author of the Bellwether Report said: “Although marketing budgets continued to decline at a marked pace amid ongoing Covid-19 restrictions, it was positive to see a further trend towards stabilisation. Meanwhile, upbeat forecasts from UK marketers for the coming financial year, after the marked reduction in budgets through 2020, bolsters expectations for a post-pandemic recovery and bodes well for the UK economy.

“Without a doubt, the improvement in budget plans from the previous survey period will have been supported by the release of the UK governments roadmap to relaxing restrictions. It has allowed businesses to look beyond the current climate and begin to build towards a time when demand will recover. If all goes to plan, a strong economic recovery should see ad-spending rise sharply in the second half of the year.”

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