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UK marketing budgets revised up only marginally in Q4 2015 but positive outlook signalled for year ahead

UK marketers have revised their budgets up in Q4 2015, but to the smallest amount for nearly three years, reveals the Q4 2015 IPA Bellwether Report published today (14 January 2016). Despite this marginal increase, growth has now been sustained for 13 successive quarters and marketers’ budget plans for 2016/2017 are positive.

14/01/2016

The report, which has been conducted on a quarterly basis since Q1 2000, revealed a net balance of +0.5% of companies registering an increase to their budgets during Q4 2015, down from +4.4% in Q3 2015. This marks the lowest upward revision in 11 quarters. (*The net balance is calculated by subtracting the percentage reporting a downward revision from the percentage reporting an upward revision.)

Optimism regarding marketers’ own financial prospects and their wider industries also remained relatively subdued in Q4, reflecting the softening in the rate of UK economic expansion in the second half of 2015. A net balance of +20.4% of companies indicated they had grown more optimistic about their own prospects compared to three months ago, down from +22.4% in Q3 and the lowest recorded level in 11 quarters. The net balance for wider financial prospects was +7.0%, little changed from +6.8% reported in Q3.

Despite easing confidence over the quarter, UK marketers have indicated a positive outlook for their 2016/17 budget plans, with a net balance of +24.6% of companies signalling growth in their total budgets for the coming year.

Equally positive, and in spite of geopolitical instabilities, potentially higher interest rates and uncertainty over Brexit, Bellwether forecasts a steady expansion of 3.9% in UK adspend growth in 2016.

By sector:

Internet marketing recorded the strongest upward revision to budgets of all the Bellwether categories at +6.9%, although this is down slightly on Q3’s +7.8%. Within internet, spending related to internet search/SEO also showed a robust performance in Q4 recording a net balance of +5.8%, up from +0.6% in Q3. 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%). Declines were, however, recorded for ‘other’ at -12.1%, sales promotions (-7.7%), market research (-7.3%) and direct marketing (-1.7%).

Commenting on the latest survey:

Paul Bainsfair, IPA Director General: 

“While these latest findings reveal inevitable easing due to macroeconomic concerns, there are some positives. Marketers have signalled a marked increase in their budget plans for 2016, both the Olympics and Euros are on the horizon and Bellwether has predicted annual adspend growth of 3.9%. Not a bad start to the year."

Paul Smith, Senior Economist at Markit and author of the Bellwether report:
“Marketing budget growth eased again in the final quarter of the year, slipping to a near three-year low in line with the softer UK macroeconomic environment that has been evident over the second half of 2015.

“Moreover, as has been the case in the post financial-crisis world, companies are maintaining a keen sense of cost-consciousness and a value-for-money approach to their marketing budgets. Such forces have probably weighed on growth in the final quarter of the year.

“However, given that the current run of expansion now extends to over three years, by far the best in the 16-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.”

Read further industry comment here.

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 14th January 2016 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 economics@markit.com.

Last updated 14/01/2016


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