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Traditional media leapfrogs online as new IPA Bellwether survey show strong growth in UK adspend

The good times seem to be rolling at last, at least according to agency trade body the IPA’s latest Bellwether survey of UK adspend.

Interestingly, main media showed the biggest growth at 11.7 per cent, overtaking internet which languished (relatively) on 8.5 per cent. This appears to show that big brand campaign are coming back with a bang and will be good news for ‘traditional’ agencies (many of which saw their billings fall last year) and media owners like ITV.

The Q1 2014 IPA Bellwether Report shows the record largest single upwards revision to marketing budgets in 14 years of data collection. The latest survey also marks the sixth successive quarter that marketing budgets have been revised up and rounds off a positive 2013/14 financial year which saw budgets increased to the greatest degree for seven years. The Survey comes amid reports that sustained sales growth and rising incomes have continued to support financial prospects, both within companies and across industries.
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The report, which has been conducted on a quarterly basis since Q1 2000, revealed a net balance* of +20.4% of companies registering an increase in budgets during Q1 2014, up sharply from Q4 2013’s +11 per cent and the previous Survey record of +12.3 per cent in Q3 2013 (the net balance is calculated by subtracting the percentage reporting a downward revision from the percentage reporting an upward revision).

The sustained period of upward revisions meant that the 2013/14 financial year proved to be positive for marketing executives with a net balance of +17.2 per cent of companies reporting that their budgets had been increased. This proved more positive than companies were forecasting at the start of 2013 when a net balance of +13.5 per cent of companies were anticipating budget growth and marked the first net increase in budgets over the year for the first time since 2006/07.

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Companies also remained upbeat regarding their own financial prospects with the net balance of firms that have become more optimistic remaining historically high at +41.7 per cent, although this is slightly down from +47% in Q4 2013. Meanwhile, the net balance for wider industry financial prospects rose to a new Survey high of +39 per cent, up from +35.4 per cent in Q4 2013.

This optimism, which reflects the wider UK economic outlook, looks set to grow further with provisional data for the 2014/15 financial year revealing a net balance of +26% of companies expecting to see growth, the best recorded by the survey for seven years.

Additionally, the Bellwether Report’s predictive model, which is based on the Office for Budget Responsibility’s forecasts for the UK economy indicates a slightly more bullish projection for GDP of three per cent, which in turn is set to result in a real-term increase in adspend of 4.7 per cent in 2014 and 3.5 per cent in 2015.

Interestingly, main media showed the biggest growth at 11.7 per cent, overtaking internet which languished (relatively) on 8.5 per cent. This appears to show that big brand campaign are coming back with a bang and will be good news for ‘traditional’ agencies (many of which saw their billings fall last year) and media owners like ITV.

IPA director general Paul Bainsfair says: “With confidence remaining strong, forecasts revised up higher than ever before, and budgets being increased to the highest degree for seven years, the Q1 2014 Bellwether Report reveals that both the advertising industry and the wider economy are facing a future full of opportunity, innovation and most importantly of growth. This is a very good place to be. All very good news for the Government in the run-up to an election year.”

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