The UK economy – and the ad market with it – is getting like Groundhog Day: bumping along the bottom even while narrowly avoiding recession quarter after quarter.
The IPA’s latest quarterly Bellwether report paints a pretty gloomy picture. There are some shafts of light. Plus 5.3% of respondents say their budgets are going up (down from 6.4% in Q2) with good old main media (TV and the like) showing the biggest uplift (for once.)
Main media was up 7.3% (-2.5% previously), online (as ever) up 9.1%, video up just O.9%, audio down 10.8% and Out of Home, which seems to be having a thoroughly sticky time, down 12.1%. PR and direct marketing both rose.
Industry-wide outlook remained negative in Q3 with 24.9% of panellists negative about their outlook, double that in Q2. Most expect no growth in the ad market in 2023 and 2024. The inescapable conclusion is that, although the UK is not technically in re3cession yet it’s on the way. Hardly surprising in a high tax/high interest era when the Government is desperately scrambling for cash to pay a ballooning debt interest bill.
Better times are not expected until 2025 and then only snail-like growth.
IPA director general Paul Bainsfair says: “Against a backdrop of economic stagnation and ongoing elevated levels of inflation in the UK, coupled with increasing global geo-political volatility, the trading environment for companies is unquestionably tough. But instead of seeing a re-run of last quarter’s slightly concerning results where companies revised up their short-term sales promotional activity to record amounts while reducing their main media spend, this time we are buoyed to see a more considered, reverse state of affairs.
“This quarter, those companies that can are heeding the evidence that in general, investing more in main media will help to steady them through the uncertain times and help to ensure the longer-term health and profitability of their brands. Crucially, they – alongside the many investment analysts we have also recently surveyed – are recognising that marketing spend is indeed an investment not a cost.”
Let’s wait and see. Maybe Christmas will break what seems to be becoming a rather vicious circle.