Marketing budgets grow strongly in Q3
Thursday, October 21, 2021
Total UK marketing budgets have increased at the strongest rate since Q2 2017 according to new research, with growth seen in two of the categories that encompass print advertising.
The Institute of Practitioners in Advertising (IPA) Bellwether Report for Q3 2021, which was published today (21 October), found that with a final loosening of pandemic-related restrictions helping market demand to bounce back, a net balance of +12.8% of firms registered upward budget revisions for their marketing spend, up from +6.0% in Q2.
25.6% of Bellwether respondents recorded higher spending compared with 12.8% that reported budget cuts. The latest data marked the first time in three years that successive quarters of growth in overall marketing spend has been registered.
However, the report found that upward revisions to total marketing budgets still fell short of the growth businesses had initially predicted for the 2021/22 financial year, where a net balance of +17.4% of firms anticipated expansion.
Some surveyed companies were wary of lingering uncertainties, particularly around the trajectory of virus cases as winter nears. Ongoing supply chain disruptions, which some businesses mentioned had impacted their ability to carry out marketing campaigns, were also cited as a downside risk.
Main media advertising was the best-performing marketing category in the third quarter, with a net balance of +8.6% of firms recording upward budget revisions (from +1.3% in the previous quarter), as more businesses upped their spending on 'big-ticket' campaigns.
Within this category, while double-digit growth was seen for video and ‘other online’, published brands – which includes advertising in newspapers and magazines – returned to growth in Q3 (+5.2%, from -6.1% in Q2). Marketing budgets for out of home advertising, however, dropped by 2%, having already fallen by 7.5% in Q2.
The remaining marketing categories, including market research, events, and PR among others, were split between growth and contraction. Budgets for direct marketing, which encompasses direct mail as well as other mediums such as email and SMS, however, improved on the previous quarter (net balance of +5.6%, from +0.7%).
IPA director general Paul Bainsfair said the organisation welcomed the findings that advertisers “are making the most of the overall economic uptick and are seizing the opportunity to invest in their brands”.
“As the evidence shows, investing in long-term brand-building media is paramount to a brand’s long-term success,” he added.
Dave Randall, commercial director at Future, said the company’s own study of 2,000 UK consumers conducted last month has found that consumers have nearly £200bn in accumulated lockdown savings, and 78% of them are planning to splash the cash on Black Friday purchases and Christmas gifts.
“To fight for a slice of the predicted consumer spending pie, marketers must prioritise their peak trading marketing strategy and focus on grabbing cash-rich consumer attention with relevant and specific content.
“With vast amounts of first-party data and a deep understanding of their audiences, publishers are the perfect partner to help brands and agencies engage with these high-intent targeted audiences, while offering flexibility and adaptability – vital characteristics as ongoing supply chain uncertainty makes stock levels an increasingly crucial consideration for marketers.”
The UK's recovery from the coronavirus pandemic has been much faster than the Bellwether Report predicted this time last year, in part thanks to the success of the vaccination rollout, but also owing to the positive impact the furlough scheme has had on keeping a cap on the unemployment rate, which has contributed positively to strong levels of demand for UK goods and services.
Bellwether author IHS Markit has revised its GDP growth forecasts for 2021 and 2022 higher since the last Bellwether survey, to 6.6% and 5.1% respectively, from 6% and 5% given the pace at which consumer spending has bounced back.
It said these factors will continue to facilitate the recovery to pre-pandemic levels of economic activity and, as such, the Bellwether Report anticipates strong adspend growth of 6.6% and 6.2% in 2021 and 2022 respectively.
The Bellwether is based on a questionnaire survey of around 300 UK-based companies that provide regular quarterly information on trends in their marketing activities. Participating companies include a broad variety of advertisers in terms of market sector and geographical location.
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