The report, which has been conducted on a quarterly basis since Q1 2000, revealed a net balance* of +11.8% of companies registering an increase in budgets in Q1 2015, up markedly from +6.1% in Q4 2014. (*The net balance is calculated by subtracting the percentage reporting a downward revision from the percentage reporting an upward revision.)
The latest data marked the final quarterly reading for the 2014/15 budget year, and with upward revisions to budgets signalled throughout the period, overall growth for the year was the best recorded since 2004/05 with a net balance of +21.8% of companies indicating that budgets had risen over the year.
In terms of actual spend, Bellwether data for the 2015/16 budget period showed that a net balance of +28.0% of panellists are forecasting an increase in their marketing budgets relative to 2014/15. This is the most upbeat assessment signalled by the panel for eight years, and all Bellwether categories are forecast to benefit from this expected upward revision to total marketing budgets. Events and main media advertising are predicted to be the largest beneficiaries, suggesting that companies will continue to maintain spending on both high-level campaigns (such as TV, cinema and press), and look to further increase their footprint in cost-efficient online marketing solutions.
The general confidence signalled by marketing executives reflects growing optimism about their own and wider industry financial prospects. A net balance of +37.8% of companies have grown more optimistic about their own financial prospects, compared to +30.7% in Q4 2014. The net balance for wider industry financial prospects rose from +16.2% in Q4 2014 to +26.0% during Q1 2015.
Positive prospects for finance and marketing budgets are rooted in a strengthening macroeconomic climate. Allied with official estimates from the Office for Budget Responsibility (OBR) indicating solid growth rates of both consumer spending and investment in 2015, the latest Bellwether survey predicts a real-term increase in UK adspend of +4.2% in 2015 before growth cools slightly in 2016 to +3.6%.
The highest upwards revisions to marketing budgets in Q1 2015 were made to internet, recording a net balance of +8.4%. This extends its run of growth to 23 successive quarters, although this was the lowest upwards revision in just over two years and was down from a six-quarter high of +15.1% in Q4 2014. Within internet, spend related to search/SEO also increased, recording a net balance of +8.5%, although this was also down from Q4 2014’s net balance of +15.7% . Events budgets were also revised higher, recording a net balance of +5.7% which extends its period of growth to a year-and-a-half; as were direct marketing (+5.5%), which recorded its best performance since Q3 2010. Main media advertising budgets were revised up for the fifth consecutive quarter (+2.9%) although to a much lower rate than Q4 2014’s +6.7%. Sales promotions (+0.6%) also recorded growth, but ‘other’ (-7.1%), PR (-1.8%) and market research (-1.3%) all recorded downward revisions.
Paul Bainsfair, IPA Director General: “With over 10 successive quarters of growth in marketing budgets and the best budget year for marketing spend in a decade, this latest Bellwether provides welcome evidence of the extent to which clients recognise and value the significant contribution marketing communications makes to their business success. This stands us in good stead for what is set to be an unsettled few months politically.”
Paul Smith, Senior Economist at Markit and author of the Bellwether Report: “Following the dip in the headline net balance during Q4 2014, the latest Bellwether indicated a welcome re-acceleration of growth in marketing spend over the first three months of the year.
“While many commentators await to see what form Britain's post-election economic landscape takes, marketing executives seem to be shrugging off any uncertainty. Indeed, latest data shows companies planning to bolster their marketing budgets for the forthcoming accounting period to the greatest degree in eight years.
“Already coming off the best annual performance in a decade, growth looks highly likely to be extended into a third year in 2015/16. Accordingly we are predicting a strong real-term increase in UK adspend over 2015 as a whole.”
Tom Lewis, IPA Finance Director: "The continued positive trend in Bellwether is good news for finance directors everywhere for the top line. Notwithstanding political uncertainties and tightening labour markets, the extended forecast for growth means that, as the sun is shining, it is the right time to go fix the roof as regards the bottom line."
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 16th April 2015 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, or to request historical data, contact firstname.lastname@example.org.
Here's what some experts from across sectors and around the UK think:
James Goddard, Chief Executive, JJ Marketing , “Despite PR budgets being revised lower in Q1 2015, this could just be an anomaly as this is the first such occurrence in five quarters. We only have to look at the breakdown of 2015 budget plans to see that things are looking good for PR with a net balance of 15.4% of companies reporting an increase in spend.”
Tom George, Chairman UK and Northern Europe EMEA, MEC and chair of the IPA Media Futures Group, “The outlook for the UK media market remains very encouraging and the positive net balance for the main media for five successive quarters as reported in the latest Bellwether, represents the best sequence in the last fifteen years.
The internet continues to attract an increasing share of budgets and we predict that it will account for over half of all investment for the first time ever this year. This notwithstanding, TV continues to perform remarkably well indicating its importance in long-term brand building and underlining traditional television’s strength in that it has few substitutes.
Whilst the slowdown in net balance growth for Q1 2015 is noted, so is the increased optimism for 2015/16. This optimism has been translated through to actual media spend with growths of 8% and 6% across the last two years and we see no reason why 2015 growth shouldn’t reach if not exceed last year’s levels. This would be no mean feat in an election year which is normally characterised by uncertainty."
Paul Mead, Founder & Managing Director, VCCP Media and chair of the IPA Search Group,
“Search marketing budgets continue to show an upward trend quarter on quarter. Although the rate of growth slowed compared to Q4/14 its still a remarkable trend given how established and mature the search channel has become for many advertisers. Its shows there is still a great deal of potential out there.’
Pete Robins, Managing Partner, Agenda21 and chair of the IPA Digital Media Group, “Once again Internet spend showed a positive uplift. As widely recognised, growth in consumption of media across the digital platforms of desktop, tablet and especially mobile are continuing to change how advertisers are looking to invest their marketing budgets – and as more things become internet enabled we are not expecting this trend to change anytime soon.”
Paul Simonet, Creative Strategy Director, Imagination, “The increasing demand for Events and Experiences really only bears out what we have been seeing commercially for some time....You cannot be a modern brand without a digitally enabled experience strategy.....Welcome to the Experience Economy!”
Around the UK:
Claire Wood IPA Chairman for Scotland, and Planning Director, Leith Agency, “The latest Bellwether report predicts a continuing rise in marketing spend with the quarter 1 2015 figure, the tenth successive report of budget increases. Digital spend continues to show the fastest growth closely followed by investment in events and direct marketing. This is great news for Scotland which boasts agencies that excel in all three areas alongside media and creative agencies with an in-depth understanding of all marketing channels. Overall, this is the most upbeat outlook that Bellwether has recorded in 8 years.
“As I come to the end of my two year term as Chairman of the IPA in Scotland, it’s (surely) no more than a happy accident that we’ve witnessed this sustained growth. But I’m delighted that our focus on furthering digital understanding and expertise has fed this sector growth in a country that already excels at gaming, web build, search and strategy and broader digital technologies.”
Stephen Roycroft, IPA Northern Ireland Chairman and Managing Director, RLA Ireland, “It’s very encouraging that the momentum on marketing investment has hit a ten year high, and that advertiser confidence proves once more that adspend is a factor for growth, not cost.”
England & Wales
Ben Quigley IPA Chairman England & Wales and Group Chief Executive, Everything Different, “The latest Bellwether survey marks a welcome further upward revision to marketing budgets and shows companies around the UK are raising investment in marketing at a time of rising economic activity and growing confidence, both in their own and also the wider economy’s prospects”.
Andrew Wilson, IPA City Head for Birmingham and Chief Executive, WAA, “This is a report that shows an industry on the up, and it reflects the anecdotal feedback I’m hearing from agency colleagues here in the Midlands. Client briefs are increasing in confidence, and spend is coming through. There’s not the super-positive feeling we experienced pre-recession, but there is a spring in our collective step. The Midlands certainly should be feeling positive with the pivotal Grand Central redevelopment nearing completion and the massive investment announcements in the last few weeks from HSBC and Jaguar Land Rover. This inward investment stands to benefit all along the supply chain, including marketeers.”
Andy Reid, Managing Director at McCann Bristol and IPA City Head for Bristol, “The findings from the latest Bellwether Report are very much a reflection of our own experience as an agency and as a creative city. We are seeing that clients are becoming more confident with their budgets and in particular the investment growth in internet advertising is particularly encouraging, showing a trust and strong ROI in the digital sector. This latest report gives concrete evidence to the positive outlook in the industry and bodes well for our agencies looking to experience further growth in 2015.”
Last updated 16/04/2015