IPA Bellwether: UK ad budgets up again but clouds gather

Total UK marketing budgets have increased at the strongest rate since Q2 2017, according to the Q3 IPA Bellwether Report published today, as a final loosening of pandemic-related restrictions allowed a further step forward in the broader economic recovery.

A net balance of +12.8% of firms registered upward budget revisions in Q3 2021, from +6.0% in Q2. Approximately one-in-four Bellwether respondents recorded higher spending (25.6%), compared with 12.8% with budget cuts. The latest data marked the first time in three years with successive quarters of growth.

But although upward revisions to total marketing budgets were strong, they fell short of the growth firms initially had predicted for the 2021/22 financial year, where a net balance of +17.4% anticipated expansion. Many companies were wary of lingering uncertainties, particularly around high levels of virus cases into winter. Ongoing supply chain disruptions are also cited as a downside risk.

Revisions to marketing budgets by category

Main media advertising was the best-performing marketing category in the third quarter, with a net balance of +8.6% of firms recording upward budget revisions (from +1.3%), as more firms upped their spending on ‘big-ticket’ campaigns. Within main media, video (+12.6%, from +4.2%) was the main driver, followed by other online (+10.6%, from +11.0%) and audio (+6.0%, from +1.1%). Published brands returned to growth (+5.2%, from -6.1%), although Out of Home fell again (-2.0%, from -7.5%).

Bellwether author IHS Markit has revised its GDP growth forecasts for 2021 and 2022 higher since the last survey, to 6.6% and 5.1% respectively.

IPA director general Paul Bainsfair says: “While we welcome the re-opening of global economies, it has brought with it various new challenges, particularly on the supply side. And there were widespread concerns among Bellwether panellists that supply shortages and issues with transport could hinder their business operations, and also impact their sales performances as many firms pass on these higher costs to their own selling prices.

“We welcome the figures that revea advertisers are making the most of the overall economic uptick and are seizing the opportunity to invest in their brands. It is particularly good to see that companies are investing more in main media ‘big ticket’ campaigns, with these budgets revised up to the greatest extent since Q2 2017. As the evidence shows, investing in long-term brand-building media is paramount to a brand’s long-term success.”

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