Marketing budgets finally expand as Bellwether predicts conservative growth
The latest IPA Bellwether Report, published today, predicts increased UK adspend of 7.5% for the remainder of this year, and 6% for next year as businesses continue to recover to their pre-pandemic levels of activity.
The latest Q2 2021 figures show marketing budgets expanded for the first time since Q4 2019 and to the sharpest extent since Q1 2019. It brings to an end a five-quarter sequence of continual cuts to overall marketing spend.
A net balance of +6.0% of surveyed companies expanded their total marketing budgets during the second quarter. Just over one-in-five (21.2%) panellists registered growth, compared to 15.2% that reported a decline.
Three categories of marketing spend recorded upward revisions during Q2.
Public relations led the upturn with a net balance of +1.8% of firms growing their expenditure in this space (up from -8.0% in Q1).
The key segment of marketing, main media, also recorded growth in the second quarter. A net balance of +1.3% of businesses raised their main media budgets (up from -8.2% previously).
Within main media, video (+4.2%, from +3.3%), audio (+1.1%, from -9.0%) and other online advertising (+11.0%, from 0.0%) all grew, while published brands (-6.1%, from -22.2%) and out of home (-7.5%, from -24.1%) budgets were downwardly revised.
Responding to the main media figures, Ross Nicol, VP EMEA, Zefr said: “Once again video has proved its merit, with marketers upwardly revising budgets for a second quarter in a row. Furthermore, financial prospects at the company and industry level are in positive territory - indicating that spend on this channel will continue to soar in H2.”
Massimo de Magistris, VP head of Freewheel Markets, International agreed. He said: “The positive growth in the video category for two consecutive quarters is a very encouraging sign for marketers who are investing in the medium, especially in those premium channels that have seen a surge in viewership in the last year because of uptake in CTV screens.”
Nicolas Bidon, global CEO, Xaxis said: “Marketers are searching for certainty in uncertain times and the latest IPA Bellwether Report ad spend findings support this. The digital advertising category saw +11% of respondents revise their online marketing budgets upwards from the previous quarter, an area where technologies such as AI are having a significant impact. These tools can confer additional certainty for marketers through the creation of custom metrics that enable highly measurable campaigns based on specific objectives and are directed towards business outcomes.”
Elsewhere, Bellwether signalled a slight uptick in direct marketing budgets (+0.7%, from -11.8%), while sales promotions (-0.7%, from -16.2%), market research (-9.6%, from -17.8%) and other (-2.5%, from -14.7%) marketing expenditure were all cut.
Given the continued restrictions on large gatherings that were in place during the second quarter, it was no surprise to see events budgets (-24.7%, from -43.2%) register by far the strongest decline of the monitored forms of marketing.
Bellwether’s predictions for future adspend are more conservative than other analysts. For example, as part of its global ad growth forecast, Dentsu is predicting 8.5% growth in the UK during 2022. This is also a downgrading from an original forecast of 10.5%.
Beyond the next 18 months, Bellwether foresees adspend growth moderating further to 2.7% in 2023 once the UK economy has recouped the pandemic-related losses, and then adspend growth of 1.2% and 2.4% in 2024 and 2025 respectively.
Joe Hayes, senior economist at IHS Markit and author of the Bellwether Report said: “The economic data that has emerged in recent weeks tell us that UK businesses have embarked on what we hope will be a short road to recovery.
“The Q2 2021 Bellwether report was no different, and the strongest upward revision to total marketing spend since the beginning of 2019 is a great indication that firms have grown confident towards economic prospects.
"We hope that this is just the beginning and the end of lockdown restrictions, further improvements in vaccination rates and buoyant consumer spending will support even stronger growth in marketing spend in the second half of the year.”
Phil Duffield, VP UK at The Trade Desk concluded with his reaction. He said: "If the last five quarters have taught us anything, it's to expect the unexpected. Consumer behaviours may never return to the predictable patterns we once knew so decision-makers will need to remain agile in their approach.
"I'm confident that marketers who adopt the right technology - with the capability to adapt spend according to what's working and what isn't - will have plenty of reasons to be positive going forward. One thing's for sure - this quarter signals a bright future for the ad industry."