Companies report strongest marketing growth in more than 4 years

Stephen Chapman's picture
by Stephen Chapman

UK marketing budgets have increased at the strongest rate since 2017, according to the latest IPA Bellwether Report.

According to its survey +12.8% of firms registered a growth in marketing budget for the third quarter of 2021. That compares to +6% in the previous quarter.

It’s the first time in 3 years that successive quarters of growth in marketing spend have been registered.

“It is encouraging to hear the overall positive sentiment that runs throughout the Q3 Bellwether Report. News that marketing budgets are increasing at their strongest rate since the first half of 2017 is of course welcome news and reaffirms the importance of how we measure advertising effectiveness," said Richard Aldiss, MD, McCann Manchester and IPA City Head for Manchester and the North West.

"With consumer demand brimming, a successful vaccine roll out and life resembling former normality in parts, plus the opportunities our new lifestyles have commanded, we are optimistic as we look forward to Christmas and 2022."

However, Aldiss warned that things can change at pace:

“Positive forecasts are of course welcoming but, the last 19 months have taught us that consumer behaviour can shift quickly.

“We have seen just how rapidly factors such as supply chain issues, Covid and Brexit can determine a seismic change. As an industry, we need to be able to respond quickly, tactfully, and creatively for our clients to exceed the expectations of the reimagined consumer. Agility is a superpower we all need.”

The report also signals some caution, as despite the positive signs, the figures do fall short of the 17.4% of companies that had forecast expansion during 2021/22.

"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. Having said this, we welcome the figures that reveal, in spite of this, advertisers are making the most of the overall economic uptick and are seizing the opportunity to invest in their brands,” added Paul Bainsfair, IPA Director General.

“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.”

Main media was the best-performing category, with a net balance of 8.6% of firms recording upward revision (from +1.3%).

Within this, video was up to 12.6%, online 10.6% and audio 6%.

Published brands returned to growth (+5.2%, from -6.1%), however out of home fell again (-2.0%, from -7.5%).

Direct marketing was +5.6%, Sales and Promotions did see growth (+4%), while market research increased to +0.7%, from -9.6%.

Due to Covid-19, Events budgets had a net balance of -3.2% and PR moved into the negative (-1.8%).

"The UK economy's performance over the third quarter has been remarkably positive, helped by the progressive loosening of containment measures and a successful vaccination programme,” said Joe Hayes, Senior Economist at IHS Markit and author of the Bellwether Report.

“We couldn't have imagined such a fast recovery in economic activity earlier in the year when lockdown measures were at their most stringent. We're expecting UK GDP to have recouped all pandemic-related losses by no later than mid-2022, and Bellwether panellists have provided us with even more evidence that firms are working hard to re-grow their businesses, with one-in-four upwardly revising their total marketing budgets. As we said last time, we hope this is just the beginning, and businesses continue with their aggressive growth plans to keep momentum moving as the post-lockdown growth boom peters out.”

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