Slight Upturn for UK Marketing Budgets... MR Excepted

In the UK, ad association the IPA has released its marketing Bellwether report for the third quarter, suggesting a slight general upturn in budgets and the first positive sentiment about company-level financial prospects in more than a year. However, MR budgets were once again more likely to fall than rise.

The IPA is the professional body representing advertising, media and marcoms agencies based in the UK, and has around 270 agency brand members. The Bellwether first ran in 2000 and is currently based on a questionnaire survey of around 300 UK-based companies from the top 1,000, sampled to reflect 'actual marketing trends in the whole economy'. Respondents are primarily marketing directors or similar and questionnaires are sent out in the final three weeks of each calendar quarter.

The survey calculates net scores by subtracting the percentage of respondents predicting a decline in spend from that predicting a rise, in each area / sector. This quarter, 22.3% of panellists reported an increase in their marketing expenditure, and 18.7% a decrease, for a net score of +3.6%. This represents a slight decline from +5.5% recorded in the previous quarter, and is well below the +18.4% net balance of companies that anticipated growth for the 2025/26 financial year, but still marks back-to-back quarters of total marketing budget expansion.

Events and direct marketing had the highest net scores, rising from +3.9% and +9.1% to +10.9% and +9.7%, respectively; and PR also showed a positive balance, little changed at +2.5%. Feedback suggests this reflects marketers reallocating resources to methods which enable brand managers to be more targeted, focusing on lead generation and customer engagement.

As last quarter, main media budgets saw no change (both net 0.0%), but this masks a rise in video and other online categories (net balances of +6.7% and +2.1% in Q3, from 0.0% and +2.2% in Q2, respectively), while published brands, audio and out-of-home recorded net balances of -6.2%, -13.0% and -15.2% respectively. Market research and the 'other' category once again made up the bottom two of the rankings, with a net balance of -6.8% firms cutting MR budgets (-7.0% in Q2); and 'others' falling from -8.7% in Q2 to -12.1% in Q3.

Bellwether respondents felt more optimistic this quarter about their own companies' financial prospects - this was the first time since Q2 2024 that the net balance staggered into positive territory, with 25.7% feeling more optimistic about their financial outlook and 22.8% pessimistic - a net balance of +2.9%, comparing with -3.0% last quarter. Firms remained downbeat about the prospects for industry as a whole, with a net balance of -24.0% in Q3 - more than a third of respondents (33.9%) foresee an industry-wide decline, whereas only 9.9% expressed optimism.

Maryam Baluch, Economist at S&P Global Market Intelligence and author of the Bellwether Report, said of the results: 'UK marketing budgets rose further in the penultimate quarter of the year, providing further encouraging news after a soft beginning of the year. The data showed that events budgets saw the most significant increase in spend, closely followed by direct marketing, as firms prioritised face-to-face client and prospect engagement. In contrast, spending on sales promotions declined as firms favoured brand-building activities which are more supportive of long-term growth.

'Most notably, the latest Bellwether data reveals renewed optimism regarding financial prospects at the company level, with respondents expressing positivity for the first time in five quarters. Despite ongoing economic challenges, this shows that businesses have adapted by seeking out new opportunities for growth.'

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.