With a report that indicates growth in both promotions (+1.2%) and increases in direct spending, predictions for 2017/2018 look positive for the industry.
Run of marketing budget growth extended to
- Internet and main media advertising record
strongest increases in budgets
- Company financial prospects strengthen...
- ...underpinning positive projections for
growth in 2017/18
- UK economic resilience leads Bellwether to
predict rise in adspend in 2017
Following stagnation at the end of 2016, the
Bellwether survey for the first quarter of 2017 indicated a solid upward
revision to budgets related to direct marketing*.
Latest data indicated that a net balance of +5.3%
of companies raised their direct marketing* budgets since the previous
quarter. That was the best reading recorded by the survey since the first
quarter of 2015, although growth in this category continues to lag wider
Marketing executives are predicting further
growth in the coming financial year. A net balance of +7.5% of companies
signalled positive projections for direct marketing budgets for the
2017/18 financial year, with a little over 27% of companies indicating
expectations for an upward revision against around 20% that are predicting
Source: IPA Bellwether Q1 2017 Report
Main media advertising also enjoyed a strong
upward revision to budgets during the first quarter of 2017. The respective net
balance jumped to +10.7% during Q1, up from +5.1% in Q4 2016 and the best recorded
by the survey for just under three years.
Elsewhere, direct marketing budgets increased to the greatest extent for two
years following stagnation in the previous quarter (net balance: +5.3%, from
0.0%), while there was a noticeable slowdown in the events category. Latest
data showed the respective net balance declined to +4.9%, from +12.3% in the
previous quarter and the lowest reading recorded by the survey for over a year.
Other categories that registered an increase in marketing spend included sales
promotions (+1.2%) and PR (+1.1%). However, ‘other’ (-4.5%) and market research
(-9.9%) both recorded deteriorating budget positions relative to those at the
end of 2016.
Adspend forecast to grow
With the UK economy showing considerably more resilience during the second half
of 2016 than was generally envisaged by economic commentators, this momentum is
now forecast to carry through into 2017.
Although GDP growth is expected to slow in the first quarter of the year, the
economy seems to have sufficient momentum to grow at a solid pace in 2017 (the
OBR are expecting a rise in GDP of 2.0%).
The Bellwether therefore predicts
that this will help lift adspend by 0.6% in real terms over the year as a whole
(previous forecast: -0.7%).
Further out, Bellwether predicts a stagnation in adspend in 2018, before growth
recovers in 2019 and 2020 to rates of 1.8% and 2.3% respectively. However,
given the difficulties in trying to predict the effects on the economy of
Brexit negotiations and subsequent UK departure from the EU in 2019, current
forecasts remain especially uncertain.
Paul Bainsfair, Director General, IPA:
“Once again the Bellwether shows that while the impact of Brexit
remains uncertain, marketers are continuing to invest in marketing.
Furthermore, despite the current, turbulent digital ecosphere, it is clear that
marketers are attracted to the cost-effectiveness of digital advertising and
its ability to reach and accurately target their consumers.”
Paul Smith, Senior Economist at IHS Markit: “The Q1 2017 Bellwether survey
paints a picture of a solidly growing UK economy,with companies continuing to
show a willingness to commit increased resources to marketing and capitalise on
current positive sales trends.
“Given the prevailing backdrop of Brexit-related economic uncertainties, a key
question is whether the resilience in spend shown post referendum can be
maintained. At present, marketers seem confident, with both sentiment around
their own company financial prospects and budgets for the year ahead remaining
inside positive territory.
“But perhaps reflect of the relative limbo we find ourselves in ahead of the
start of negotiations between Britain and the EU, degrees of confidence remain
historically low and panellists continue to note plenty of threats to the
Carey Trevill, Managing Director IPM comments
“The latest IPA
Bellwether report reflects the increasing optimism and the release of marketing
budgets that we in the promotional marketing sector are seeing at the end of
the first quarter of 2017. Brand marketers have realised that holding back
marketing plans is bad for long-term brand health.”
marketing – marketing which aims to change behaviour by offering the target
audience an incentive or reward – is incredibly powerful, and now permeates
almost all marketing communications, including online, mobile and direct.”
small rise in the index for Sales Promotion does not cover the vast majority of
what the promotional marketing industry delivers for brands and companies and
fails to take into account the integration of promotional techniques across all
marketing channels and the development of new areas such as experiential and
For further comments, please contact the IPM on 020 3848 0444