UK MR Budget Decline Halted, Bellwether Reports

UK marketing budgets grew strongly in Q1, although slightly less rapidly than in the previous, record-breaking quarter, according to the IPA's Bellwether report. Slightly more respondents reported rising market research budgets than falling, reversing the trend of the previous quarter.

The IPA is the UK's professional body representing advertising, media and marketing communications agencies and has around 270 member agency brands. The Bellwether is based on a questionnaire survey of around 300 UK-based companies - recruited from the top 1000 - giving regular quarterly information on trends in their marketing activities. Respondents are primarily marketing directors or similar.

Ratings for spending growth and decline in each sub-sector are calculated by deducting the proportion of respondents who say budgets are declining, from the number saying they are growing. In the latest wave, 24.4% of panellists recorded an upward revision to their overall marketing budgets in Q1, vs 15% seeing a contraction, giving an overall score of +9.4%, down from +14.7% in Q4 2023 but still the second highest figure in almost two years. The positive figure continues a run of growth that dates back to the second quarter of 2021, and comes amid an improving economic backdrop for the UK economy, according to the report.

Events budgets expanded at the fastest rate on record, with 2024/25 expected to be another strong year for the segment. Direct marketing (+7.0%), Sales promotions (+4.9%), market research (+1.4%, from -5.0% last quarter) and PR (+0.6%) also showed positive balances. There were declines in two sub-sectors, the 'crucial' main media segment (-0.7%, from +1.9%), and the 'other marketing activity' category (-4.3%).

Finalised budget setting plans for the 2024/25 financial year were strongly positive: 40.7% of respondents have lifted the total amount available for marketing, compared to 18% reporting cuts; although market research budgets were expected to be cut in more cases than raised, a net balance of -4.4%.

Looking at general financial prospects, 19.5% of survey respondents were more optimistic towards their industry's outlook than they were in the previous quarter, while 24.9% were less so, for a net balance of -5.4% - but this was a significant improvement on last quarter (-12.7%) and the highest seen for two years. A net balance of +9.7% of companies were more upbeat about their own companies' financial prospects, good but down from +12.6% in the previous quarter.

Joe Hayes, Principal Economist at S&P Global Market Intelligence and author of the Bellwether Report, summarized the results: 'Green shoots of recovery are appearing across the UK economy. With business survey data suggesting UK GDP will expand in the first quarter, it's no surprise to see another strong round of marketing budget growth. Cost-of-living pressures and high borrowing costs has led household and businesses to retrench in recent times, making the market more competitive to earn and retain customer business. Throughout this period, we've seen marketing perform strongly, so it's very encouraging to see that firms are staying true to the course that has clearly yielded positive results'.

Web site: www.ipa.co.uk .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.