UK Marketing Spend and Confidence Breaking Records

In the UK, marketing budgets were revised up for the eighth consecutive quarter, reflecting continued confidence in the business outlook, according to the Q3 2014 Bellwether report from ad association the IPA.

The survey, run by Markit Economics on behalf of the IPA (Institute of Practitioners in Advertising), has taken place quarterly since Q1 2000. Results now reflect answers from around 300 UK marketing professionals.

The report uses 'net balance' scores which are obtained by subtracting those reporting a decrease in a particular area from those reporting an increase. A net balance of +12.6% of companies registered an increase in budgets during Q3 2014, extending a run which included record highs of +20.4% in Q1 and +15.2% in Q2. The IPA says the trend reflects firms' desire to take advantage of a positive trading environment and bolster sales with high-profile and targeted marketing campaigns.

Similarly, a net balance of +38.6% of respondents said they had grown more optimistic compared to three months ago, while confidence regarding wider industry financial industry prospects showed a net balance of +30.4%.

The survey suggests that full-year marketing budgets are on course to be higher even than the upbeat figures initially set earlier in the year - a net balance of +26.0% of companies recorded an uplift in their marketing budgets, relative to the 2013/14 accounting period. The Bellwether predicts ad spend growth of 7.0% in 2014, slowing to 3.8% in 2015 as forecast higher interest rates kick in.

The sharpest upward revisions to marketing budgets were made to internet (+14.5%) and main media advertising (+9.2%). Events (+7.8%), direct marketing (+2.1%) and PR (+1.0%) also saw positive net balances while sales promotions (-1.1%) and market research (-1.7%) fared less well.

Chris Williamson, Chief Economist at Markit and author of the Bellwether report, said companies 'remain bullish... ratcheting up their marketing spend once again and adding to prospects of the economy continuing to grow strongly as we head towards the end of the year.' He adds: 'The third quarter upward revision to marketing budgets was the third largest recorded since the survey began in 2000, exceeded only by the upward revisions already seen in the first two quarters of the year. This represents a remarkably positive picture of companies gaining confidence about the economic outlook as the year has proceeded, ploughing more money into budgets that had already been set higher at the start of the year. At this rate, 2014 is panning out to be the best year for growth of marketing spend in the survey's 15-year history.'

Web site: www.ipa.co.uk .