UK Research Budget Indicator Worsens in Q4

Market research budgets fell for many companies in the final three months of 2015, according to the most recent IPA Bellwether Report of UK marketing expenditure. Respondents reporting a fall in MR budgets outnumbered those reporting a rise by an even bigger margin than in Q3.

The report, which is researched and published by Markit Economics on behalf of the IPA (Institute of Practitioners in Advertising), features original data drawn from a panel of around 300 UK marketing professionals to provide an indicator of the health of the economy. While the latest edition shows that overall marketing budgets were revised up in Q4 2015, this was by the smallest amount for nearly three years.

The report indicates what is happening to budgets by means of a 'net balance' score, calculated by subtracting the percentage reporting a downward revision from the percentage reporting an upward revision, overall and for each sector. For marketing budgets as a whole, the net balance remained positive in Q4 - just - at +0.5%, down from +4.4% in Q3 2015.

By sector, Internet marketing recorded the strongest likelihood of upward revision to budgets of all the Bellwether categories with a net balance of +6.9%, although this is down slightly on Q3's +7.8%. Main media recorded some growth (+1.1%) which extends the current period of expansion to two years. Also showing marginal increases were PR (+0.6%) and events (+0.6%), while declines were recorded for 'other' at -12.1%, market research (-7.3%), sales promotions (-7.7%), and direct marketing (-1.7%).

However, marketing budget growth has now been sustained for thirteen successive quarters and marketers' budget plans for 2016/2017 are positive, with a net balance of +24.6% of companies signalling growth in their total budgets for the coming year.

Paul Smith, Senior Economist at Markit and author of the Bellwether report, comments: 'Given that the current run of expansion now extends to over three years, by far the best in the sixteen-year survey history, our gaze remains firmly fixed on the positive aspects of the survey especially the marked upturn in budgets planned by marketing executives for 2016/17. We therefore wait to see if Q4 2015 proves to be a nadir in the current cycle or whether we have a little way to go before we again see a sustained upward trajectory in Bellwether'.

Web site: www.ipa.co.uk .