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‘Sales promotion’ budgets at 10 year high as overall marketing spend grows in Q2, says IPA Bellwethe

Friday July 17, 2015 at 7:42am
Marketing budgets continued to grow in Q2 2015, led by spending on events, the Internet and sales promotion. However, there was a noticeable drop in marketers’ confidence surrounding financial prospects both within their companies and the industry as a whole. The figures, from the latest Institute of Practitioners in Advertising’s quarterly Bellwether report, revealed a net balance of +12.2% of companies registering an increase in budgets in Q2 2015, up from +11.8% in Q1 and +6.1% in Q4 2014. The net balance is calculated by subtracting the percentage reporting a downward revision from the percentage reporting an upward revision. The latest survey also revealed a solid start to the 2015/16 financial year and matches up with the positive projections outlined by marketing executives in Q1. Final data revealed that a net balance of +15.1% of marketers indicated an upward revision to total marketing budgets in 2014/15, following last year’s nine-year record of +19.9%. Despite the sustained growth, there was a marked deterioration in optimism regarding companies’ own financial prospects which declined to a nine-quarter low of +25.3%, from +37.8% in the previous survey. A similar trend was seen for wider industry financial prospects with the net balance dropping to a two-year low of +13.1%, down from +26.0% in the previous survey. In terms of overall UK adspend growth in 2015, Bellwether predictions remain unchanged since Q1 and forecast a real-term increase of +4.2%. This is, however, dependent on an acceleration of economic growth in the second half of 2015. Events was the strongest performing category in Q2 2015, with a net balance of +7.4% of companies recording growth, which was a three-quarter high. Internet budgets were also revised higher, although the net balance of +6.8% was a two-and-a-half year low. Within internet, spend related to search/SEO followed a similar trend, slipping to +6.5% from +8.5%, its lowest level for a year-and-a-half. Sales promotion, at +6.0%, recorded the best quarterly net balance for this category since Q1 2004. All other categories with the exception of ‘other’ (-5.1%) recorded marginal growth, including: main media advertising (+1.7%); PR (+1.1%); market research (0.6%) and direct marketing (0.5%). Paul Bainsfair, Director General of the IPA, says: “With eleven quarters of successive growth in marketing budgets and a strong start to the financial year, this latest Bellwether is generally positive. With confidence on the wane, however, it is worth reminding marketers – as our effectiveness databank evidence attests – you won't produce profits over time without maintaining brand building adspend. So while it is good to see sales promotion activity is on the increase, the industry must guard against short-termism.”
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