The IPA Bellwether Report has been released this morning, with UK companies saying they have revised their marketing budgets up.
That comes in spite of a number of pressures, including the Omicron variant, rising inflation and supply chain-chain disruption.
In total a net balance of +6.1% of respondents said they had increased their total marketing budgets. IPA stated that this signalled the second-strongest improvement since the opening quarter of 2019.
“There is no doubt that there is still a great deal of economic uncertainty, the ricocheting effects of Omicron in Q4 are good evidence of this as demonstrated in the report,” explained Richard Aldiss, IPA City Head for Manchester and the North West and Managing Director at McCann Manchester.
“However, Covid-19 has also acted as an accelerant for positive change, so let’s continue to build on this and look forward with optimism and energy.
“We are in challenging but indeed inspiring times and we will continue to see great innovation over the next 12 months. The current landscape provides a host of opportunities for creative businesses.
“It’s good to read that marketing budgets continue to be revised upwards. As a sector we need to be match-fit if we are to respond quickly and tactfully and stay one step ahead of the emerging conscious consumer.”
By category in the fourth quarter of 2021, Market Research was the best performing area, showing a net balance of +7.0%.
This came as companies sought to understand the impact that the pandemic had had on target audiences. This is Market Research’s strongest performance since the category was introduced into the Bellwether Report almost a decade ago.
Direct Marketing recorded a net balance of +3.8%.
Main Media Advertising +3.1% – within this video was +7.3% and other online advertising +4.5%. However there were budget cuts in Published Brands (-5.9%), Audio (-6.3%) and Out of Home (-8.3%).
Public Relations also registered growth of +2.0%.
However, Sales Promotions Budgets are static at 0.0%, Events is down -3.9% and other -11.2%.
“It is very welcome news that UK marketing budgets continue to be revised upwards. As we can see, however, Omicron has heightened uncertainty, altered consumer behaviour and subsequently impacted UK companies’ marketing budget decision making,” added Paul Bainsfair, IPA Director General.
“Going forward, new variants – alongside supply chain issues and heightened inflation – may indeed induce further wobbles. They key for businesses to weather these fluctuations will be, where possible, to invest in the longer-term and in brand-building media. As the evidence proves, brands that continue to invest in their marketing throughout the toughest of times come out on top.”
Looking further forward, the report stated that 2022/23 marketing budgets are set for a “big boost” as businesses seek to step up their recovery efforts.
Data about spending plans for the next financial year showed that a net balance of 34.5% of surveyed companies are planning to expand their total marketing budget.
45.7% were “optimistic” of budget growth, with 11.2% expecting spending cuts.
The potential of relaxed rules around Covid-19 means that Events is likely to see some of the strongest growth in spend over the next 12 months (+19%).
Sales promotions budgets are also set for strong growth, with a net balance of +17.9%.
Main media marketing shows a net balance of +17.4%, Direct marketing (+15.5%), other (+10.6%), PR (+9.6%) and Market Research (+7.4%).
“It’s encouraging to see another quarter of marketing budget growth, despite the numerous headwinds businesses faced at the end of 2021. The emergence of the Omicron variant saw a modest tightening of restrictions across the UK, but some key overseas markets, such as those in the EU, saw more stringent measures,” said Joe Hayes, Senior Economist at IHS Markit and author of the IPA Bellwether Report.
“On balance however, it appears that many companies are doing their best to adapt to the ‘new normal’. That said, the overall expansion did slow amid sharp inflationary pressures. Another risk to businesses is rising cost burdens, which have been inflated by higher energy and transport prices, increasing wages and raw material shortages, and has inevitably led to some belt-tightening. Regardless, firms are pressing ahead with their bullish spending plans as close to half (45.7%) of Bellwether panellists expect to increase marketing budgets in the coming year.”
The Bellwether is based on a questionnaire survey of around 300 UK-based companies. They provide quarterly information on trends in their marketing activities.