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Ad growth expectations slowing says IPA Bellwether report

At best the UK economy has been three steps forward and two back for what seems like an eternity now (sometimes it’s the other way around.)

Recently it was buoyed by forecasts that inflation would rattle down to its 2% target, now it’s proving stickier on just over 3%.

The IPA’s quarterly Bellwether Report reflects this with the latest showing a decrease in advertiser optimism in Q1 2024 compared to Q4 2023 with the net balance of advertisers expecting budgets to increase falling from from 14.7% in Q4 2024 to 9.4%, albeit to a level that was the second highest in almost two years.

Main media led the downswing with Out of Home dropping from -8.1% to -10.8% (Bellwether seems to consistently batter OOH), published brands decreasing -1.4% to -5.7%, and audio moving up from -7% although still in decline at -4.5%. Events were up as was sales promotion.

IPA director general Paul Bainsfair says: : “Ahead of a suspected lightening-up on some economic pressures closer to home in the coming months, and despite wider geo-political uncertainties, UK companies are once again recognising the value of advertising by revising their spend up this quarter.

“One note of caution, however, is that we seeing companies revert to upping their promotional spend while revising their main media spend down – a trend that had been bucked over the past couple of quarters.”

On all-conquering sales promotion Bainsfair says: “Evidence shows that their over-use can undermine a brand’s profit margins and pricing power over time by habituating consumers to buy mainly on price. As always, a careful balance needs to be struck to ensure longer-term growth, for which greater investment in brand advertising particularly in main media, pays dividends.”

Not sure the likes of Tesco and Sainsbury’s, with their rush to Clubcard and Nectar promotions, are listening.

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