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Q3 2013 Bellwether Report reveals highest ever recorded rise in marketing spend

The latest IPA Bellwether survey published today (Thursday 17th October 2013) shows marketing spend was revised higher in Q3 at the strongest rate in nearly 13 years.

22/10/2013

The report, which has been conducted on a quarterly basis since Q1 2000, revealed a net balance of 12.3% of companies registering an increase in budgets during Q3 2013. That compared to +7.3% in Q2 and was a fourth consecutive reading above zero.

*The net balance is calculated by subtracting the percentage reporting on a downward revision from the percentage reporting an upward revision.

Respondents to the survey sighted improved economic conditions and business revenues that in turn offered a platform for increased marketing investment.

Q3’s survey indicated that confidence for companies regarding their own financial prospects had grown to the greatest degree in eight-and-a-half years, with the net balance of firms becoming more optimistic reaching +49.2% (up from +27.6% in the previous quarter).

The improvement in wider economic conditions was noted as a factor supporting optimism. This was borne out by the latest figures regarding industry financial prospects. The respective net balance hit a level of +35.4% (up from +6.1% in the previous quarter) and was also a series record high.

The latest Bellwether results adds further to the evidence of a strengthening business climate in the UK and bolsters hopes that official data will show a strong expansion of the economy in the second half of 2013.

These positive trends mean an increase in GDP forecasts for 2013. Real UK ad spend growth is now projected to be 2.4% in 2013 and 3.6% in 2014.

By sector, once again the internet saw its budgets raised up to a greater degree than any other category (+11.7% net balance). Within internet advertising online search, SEO spend were also revised up (+7.7% net balance). Main media advertising saw a second successive period of growth; the strongest since Q3 2010 (+3.4% net balance).

In contrast, Direct Marketing (-3.4%), Events (-1.1%), Market Research (-3.0%), PR (-1.7%) and ‘Other’ (-1.1%) all recorded net reductions indicating that companies are still being prudent in their approach to spending.

Says IPA Director General Paul Bainsfair; “This latest Bellwether report will provide a welcome boost to our industry, building on last quarter’s results. It indicates that companies are beginning to move forward away from the recession and that the UK economy is on the rise again. This optimism will send a continued upbeat message to the advertising industry and the wider economy”.

Says Chris Williamson, Chief Economist at Markit and author of the Bellwether report; “The Bellwether survey adds to the growing flow of upbeat data on the UK economy. Marketing spend looks set to rise sharply as companies boost their budgets to an extent not seen in the 13-year history of the survey.

“The increased appetite to spend on advertising and marketing is being fuelled by a surge in business optimism, with firms seeing their financial prospects to be the brightest for at least eight years.

“These survey findings are not only great news for the marketing industry but also for the UK’s broader economic recovery. The fact that business are starting to spend in earnest again suggests we may finally see a long awaited upturn in investment spending, which will help take the UK’s recovery onto a more sustainable footing.”

The Bellwether Report is researched and published by Markit Economics on behalf of the IPA. First published on the 17th July 2000, it features original data drawn from a panel of around 300 UK marketing professionals and provides a key indicator of the health of the economy. The 8-page 11th July 2013 edition is available to purchase here for £99+VAT (IPA Members) and £140+VAT (non Members) as an immediately downloadable PDF. To sign up for an annual subscription, please contact dan.evans@markit.com. Historical data is available on request to economics@markit.com.

What do you think of the latest findings? Join the conversation on twitter with #bellwether.

Here's what some experts from across sectors and around the UK think:

By sector:

Internet
Pete Robins, IPA Digital Media Group Chairman and Managing Partner, Agenda 21: "Whilst not surprising to see the confidence in Internet spending continue to show an upward trend, it will be interesting to see the effect the raft of new tech will have on all marketing efficiencies as budgets make an upward turn."

Search
Paul Mead, IPA Search Group Chairman and Founder & Managing Director, VCCP Media: "Search budgets can be flexed more quickly than any other channel so it can act as a ‘canary in the mine’ for the wider advertising industry. The latest Bellwether Report delivers another positive showing from search with net increases now for 17 consecutive quarters."

Direct Marketing
Rik Haslam, IPA Direct Marketing Group Chairman and Chief Creative Officer, Rapp: "The record growth forecasts from the latest IPA Bellwether survey suggest that growth in the direct marketing industry is increasingly being powered by digital, mobile and social. The survey reveals that digital is again forecast to enjoy significant grow, whereas more traditional direct marketing channels such as mail look poised to contract marginally."

Market Research
Denise Turner, Head of Intelligence, Havas Media: "Market research is a vital tool in the marketing director's armoury, giving them the confidence to make those big decisions about increased marketing investment. As such it the investment in market research often comes before the increase in investment. So although we have seen a slight decline in market research this quarter, that comes off the back of a really strong quarter, and we are seeing the results played out in very positive outlook we see for marketing spend as a whole."

Events
Paul Simonet, Creative Strategy Director, Imagination: "We do experience an ongoing trend for clients to not simply attend events but to seek to want to create their own brand experiences where their message can be played out on their own terms under full control. This may be drawing funds from the pure 'event' industry an increasing part of all experience/event budgets are targeted at creating shareable content around the events which firs in with the general internet and content boom."

Around the UK

Ben Quigley, IPA Chairman England & Wales and Group Chief Executive, Everything Different: "This latest Bellwether Report builds positively on last quarter’s excellent results. These survey findings are not only great news for the marketing industry but also for the UK’s broader economic recovery. It indicates that the UK economy is on the rise again. Bellweather sends a positive message to the advertising industry and the wider economy to an extent not seen in the 13-year history of the survey."

Claire Wood, IPA Chairman for Scotland and Planning Director, Leith Agency: "Set alongside the Bank of Scotland's news that economic recovery in Scotland is gaining momentum, the latest Bellwether Report serves up good news for communications professionals. Together, these results help to build a picture of a strengthening business climate in the UK which we hope will continue into the second half of 2013. Once again, we see a greater increase in digital spend than any other category. And the timing couldn't be better. Last week saw our inaugural DrinkDigital event with Millennial Media, one of the UK's leading mobile platforms, at Hotel Missoni in Edinburgh. Last month, our Digital Client Council met for the first time. Both forums will make a substantial contribution to our events programme which is intended to get more people having more discussions about digital technologies and how they can be used to communicate intelligently with our target audience."

Stephen Roycroft, IPA Northern Ireland Chairman and Deputy Managing Director, Ardmore Advertising: “While Northern Ireland traditionally remains a little behind the curve of macro UK economic trends, it is very encouraging to see these results and the cautious optimism emerging here also. The challenge remains for the Northern Ireland advertising industry to evidence that effective, creative marketing is an investment, not a cost; and that the businesses that work with proven reputable advertising companies here should enjoy the benefits of this nascent recovery much sooner.”

Andrew Wilson, IPA Birmingham City Head and Chief Executive, WAA: "This Bellwether Report is hugely encouraging as it continues to show growing confidence amongst marketeers, but it should certainly not lead to complacency.

"You only have to look the current situation in the US and the potential that a negative outcome could have had on the world economy to see that the fragility will not disappear overnight.

"There are also clear indicators in the report that show agencies are being challenged to provide commercially driven solutions with quicker tangible returns. That is evidenced by the areas of growth being focused around the internet, while some spend such as events and market research has declined.

"Our experience is showing that these areas may have declined individually but are being represented in more integrated campaigns that maximise returns"

Last updated 22/10/2013


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