UK market research budgets experienced another 'marked decline' in the third quarter - the second sharpest since data collection for this category started in the final quarter of 2012 - according to the latest IPA Bellwether Report.
The survey of around 300 UK-based companies found some 42.2% of respondents reporting a decline in third quarter MR budgets compared with the previous three months; with just 9.6% reporting an increase. In contrast, at the pre-pandemic beginning of the 2020/21 financial year, only -0.6% of respondents anticipated a reduction in this area.
During Q3, the Report said total marketing budgets had continued to 'contract sharply' amid ongoing Covid-19 restrictions, albeit at a softer rate of decline than in Q2 when many businesses were either temporarily closed or operating at reduced capacity. In Q3, a net balance of -41.0% of panellists saw their marketing budgets cut (and improvement from -50.7% in Q2); and more than half of respondents (52.6%) recorded a decrease in budgets from three months ago, compared with the 11.6% who saw an increase.
Sentiment towards both own-company and industry-wide financial prospects remained in negative territory during the third quarter. This was reflected by a net balance of -31.3% of firms that were downbeat, with only 16.8% of firms reporting an optimistic view, compared to exactly 48% pessimistic. When reporting on own-company financial prospects, firms were also pessimistic during the third quarter. Just 30.7% of panellists were more optimistic compared to three months ago, while 34.6% had a more negative view on financial prospects for their companies.
Bellwether authors IHS Markit are forecasting steep declines for a number of key economic indicators during 2020 - including a -11.2% contraction in GDP during 2020 as a whole; a -13.2% reduction in consumer spending; and a -20.0% decline in business investment. However, IHS Markit says it anticipates a 'robust recovery' in economic conditions during 2021, equating to a +4.6% expansion in GDP. Eliot Kerr, Economist at IHS Markit and author of the Bellwether Report, adds: 'Looking forward, if the UK can avoid another large-scale coronavirus outbreak and achieve a smooth exit from the European Union, we should see an improvement in economic conditions as firms learn how to better operate in this new business environment'.
Web sites: www.ipa.co.uk and www.markit.com .
All articles 2006-20 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.