Q2 2013 Bellwether Report reveals highest rise in marketing spend in six years

The latest IPA Bellwether survey published today (Thursday 11th July 2013) shows a sharp upward revision in marketing budgets in Q2 2013. The rise is the highest in almost six years.


22% of companies reported an upward revision to their marketing budgets during the latest survey period, compared to 15% that indicated trimming, the resulting net balance* of +7.3% was the highest since Q3 2007.

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

The positive showing for Q2 will bolster hopes that the sustained period of marketing cuts that have been evident since the beginning of the financial crisis will come to an end this year. A net balance of +13.5% of companies have pencilled in a net increase in marketing budgets during 2013 as a whole, the most positive forecast for two years.

The marked upward revision to total marketing budgets in Q2 was accompanied by growing confidence amongst companies regarding their financial prospects. Companies are at their most upbeat since Q3 2009 (a net balance of +27.6% being a sharp improvement on Q1’s +16.8%).

Bellwether has long been seen as a predictor of the overall state of the economy in the UK. The evidence provided in the Q2 2013 report adds to evidence that the UK economy is strengthening heading into the second half of 2013.

By sector, data has shown that once again internet is the key driver to overall budget growth, with anet balance of +17.4%, a stark improvement on the previous quarter’s +8.9% and the best reading since Q1 2010. A further four categories also registered upward revisions to budgets led by PR, with a net balance of +3.4%, the highest in three quarters of data collection. Sales promotion (+2.0%) main media advertising (+1.9%) and direct marketing (+0.6%) also recorded upward budget revisions. Market research budgets were unchanged. However, there were falls seen in ‘other’ (-3.2%) and events (-0.9%).

Says IPA Director General Paul Bainsfair; “This is very encouraging; with the upward revision of marketing spend in Q2 the highest for almost six years. Companies are beginning to shake off the cloak of recession and are becoming more confident in the economy. This bodes extremely well for continued growth in marketing spend for the rest of 2013. These figures should send a very upbeat message to the wider economy”.

Says Chris Williamson Chief Economist at Markit and author of the Bellwether report; “The second quarter is looking like one of the best we've seen since the onset of the financial crisis in terms of a positive signal for marketing budgets and the wider economy.

The latest Bellwether survey shows companies taking an increasingly aggressive stance with regard to boosting their marketing expenditure, which in turn reflects their views on financial prospects having improved dramatically over the course of the year to date. Marketing spend looks set to rise in 2013 for the first time in six years as companies finally perceive a brightening business outlook at home and abroad.

With marketing spend a key barometer of the health of the economy, not only is GDP growth likely to have accelerated in the second quarter, but the Office for Budget Responsibility's official forecast of 0.6% economic growth this year is all of a sudden starting to look overly pessimistic.”

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:

Digital...Pete Robins, IPA Digital Media Group Chairman and Managing Partner, Agenda 21, “Internet expenditure has historically shown near consistent growth, and this quarter doesn’t look to be any different. This large jump again suggests that investment into these channels still hasn’t reached anywhere near a plateau, and looking at the trends, there isn’t anything to indicate this is going to change anytime soon, which is fantastic news for the digital sector.”

Direct Marketing...Rik Haslam, IPA Direct Marketing Group Chairman and Chief Creative Officer, Rapp, "Time will tell if we’re finally entering a period of sustained growth, it certainly feels that way for direct and digital agencies. The Q2 Bellwether report reveals that the combined marketing spend in those two sectors, amongst the survey panel, now makes up 37% of marketing spend, and that together those sectors are growing at a faster rate than at any time over the last six years.”

Events...Paul Simonet, Creative Strategy Director, Imagination, “Although budgets were revised down slightly on the last quarter and clients remain somewhat short term about decision making, we believe budgets are holding up as the year progresses. The outlook for our sector is generally a positive one, particularly for targeted customer facing events. Still in challenging times there is an increasing ambition for experiences that can contribute directly to broader marketing reach digitally and demonstrate strong ongoing ROI.”

Media...Jane Ratcliffe, Member of the IPA Media Futures Group and Chairman, Mediacom, "Marketing directors are being given the chance to spread their wings again, with budgets gradually increasing and new product development in the pipeline. If we can maintain this sort of confidence, creativity will prevail and that's when we'll see consumer confidence and spending grow, fuelling the whole economy. It's been a tough five years but we've all learnt how to adapt to change, which will help the marketing industry to be more resilient in the future."

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. It is pleasing to see that investment in market research itself has remained steady, contributing to the very positive outlook we see for marketing spend as a whole.”

Search...Chris Whitelaw, IPA Search Group Chairman and CEO, iProspect UK, "These are very positive and welcome figures indeed. It is no surprise to see internet spend comprising the lion’s share of the increases - a trend that is only set to continue. Digital no longer represents a tick–the–box exercise for companies; it is clearly an essential revenue driver and fertiliser for the green shoots of economic recovery.”

Around the UK:

Ben Quigley, IPA Chairman England & Wales and Group Chief Executive, Everything Different, “Marketing budgets are a major barometer of the state of the economy. The second quarter figures are the strongest we have seen since the beginning of the financial crisis and clearly show confidence returning, to support sales efforts and new product launches. This is really positive news for both the marketing sector and for the economy as a whole.”

Claire Wood, IPA Chairman for Scotland and Planning Director, Newhaven Communications, “The latest Bellwether Report findings are a breath of fresh air for Scotland. More companies than ever are indicating that they're planning to increase their marketing spend in 2013. Chatting to clients in Scotland, they've started to spot signs of economic recovery on the horizon so it's great to see this born out with a wider sample. We're particularly pleased as this is the most positive result we've seen since 2007. Great news for the marketing community in Scotland but more importantly, for the whole UK economy.”

Stephen Roycroft, IPA Northern Ireland Chairman and Deputy Managing Director, Ardmore Advertising, “We are delighted to see that the vitality is returning to the marketing and advertising sector right across the UK. The advertising and marketing sector in Northern Ireland traditionally follows a little behind the national curve, down or up, but is crucial now that businesses invest in professional effective marketing in order to maximise their own share of any upturn in their own sector.”

Andy Reid, IPA City Head for Bristol and Managing Director, McCann Bristol, “The results of the Bellwether Report are genuinely encouraging and these certainly echo our own review. This, coupled with other recent studies reporting that consumer confidence is mounting, further points to real economic recovery in the UK. Companies are seeing a significant increase in business converting within the last quarter, with clients starting to confidently place a far larger emphasis on the importance of investing in their marketing spend - without compromising the ROI.”

Peter Craven, IPA City Head for Manchester and Co-founder, Madhouse Associates, “I am delighted to see that confidence is returning to the marketing industry, mirroring improving results from the manufacturing and service sectors. We have certainly witnessed more positivity in the market place in the past few months. Fingers crossed we have now turned the corner and brighter times lie ahead for the UK’s creative agencies. We have much to offer in being at the forefront of the UK economic recovery – helping our clients drive sales and growth.”

Andrew Wilson, IPA Birmingham City Head, WAA, “The IPA Bellwether report indicates confidence is up after what has been a tough economic climate for businesses to operate in, with 2013 expected to be the most successful in terms of marketing spend and wider economic growth since the recession began. With an upward revision of marketing spend by 22 per cent it is clear that companies are taking advantage of the renewed confidence of the economy by opting for more aggressive sales and marketing stances. This can only be welcome news for businesses in the West Midlands. Increased confidence combined with the value-centric culture cultivated during the downturn has led business away from the pre-recession thinking of London agency at all cost. Instead the agency landscape has levelled and work will be won and lost on merit and not geography.”

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