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Marketing budget growth rebounds from two-year low in UK

Staff Writer |
UK marketers revised their internet budgets up to their joint-strongest levels since Q3 2007 in the second quarter of 2018, marking nine years of consecutive upward revisions to this category and boosting overall growth to marketing budgets, but mobile budgets were revised down, according to the IPA’s latest Bellwether Report, for Q2, 2018.

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With around 30 percent of surveyed marketing executives reporting upward revisions, compared to just 8 percent noting a contraction, the net balance of companies reporting upward revisions to their internet marketing budgets stood at +22.7 percent.

This matches Q2 2017’s nine-and-a-half year peak, and is up significantly on Q1’s net balance of +8.7 percent. Companies also signalled plans to increase spend on search, with the net balance rising from +5.6 percent in Q1 to +11.0 percent in Q2.

On the mobile advertising front, survey data indicated the first downward revision since the third quarter of 2016. Just under 8 percent of marketing executives pointed to higher mobile advertising spend, compared to nearly 9 percent signalling a decline, yielding a net balance of -0.7 percent. This was compared to a neutral +0 percent reading in Q1.

23 percent of panellists indicated higher spending plans for overall marketing activity during Q2 2018, while just less than 17 percent pointed to lower budgets, yielding a net balance of +6.5 percent. While this is an increase on the +5.0 percent seen in Q1, it remains the second lowest since Q1 2016.

Marketers are more bullish about main media advertising, including TV, cinema and radio campaigns, with a net balance of +4.9 percent, bouncing back from a negative net balance in Q1. Budgets were revised upwards for both events (4.3 percent) and sales promotion (+4.0 percent).

Categories experiencing downward revisions include email and telemarketing, no doubt impacted by the advent of GDPR changes. Direct marketing as a whole posted a net balance of -3.2 percent, marking three years of cuts to direct marketing budgets. Other categories suffering downward budget revisions during Q2 included market research (-7.2 percent) and PR (- 6.5 percent).

Looking at overall ad spend, following a slight upward revision to the official Q1 GDP quarterly growth figure, expectations are for a bounce back in Q2. As such, the Bellwether Report predicts a greater degree of optimism towards ad spend growth for 2018 and 2019 than it previously forecast.

Growth for the year as a whole is expected to come in at around 1.1 percent (revised from 0.8 percent), while 2019 growth was also upwardly revised to 0.7 percent (from 0.4 percent).

Businesses maintained a positive outlook towards their own finances during Q2, with a net balance of +13.3 percent of firms that were optimistic, fractionally higher than in the first quarter (+13.1 percent) and the greatest level of optimism since Q1 2017.

Confidence towards wider industry financial prospects was lacking however, amid a recent softening in UK economic growth and the ongoing impasse in Brexit negotiations, with a net balance of - 9 percent, albeit up from -13.6 percent in the last quarter.

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