Marketing budgets hit three-quarter high

The IPA has revealed that more than 25% of UK businesses allocated more marketing spend in their budgets last quarter – despite doubts about their financial prospects

Marketing budgets hit three-quarter high

With the abundance of cheap tools now available, it would be easy to imagine that marketing budgets would be dwindling as more companies try to tighten the purse strings. However, it seems that this is anything but the case. The Institute of Practitioners in Advertising (IPA) has revealed that the proportion of companies increasing marketing spend has reached a three-quarter high and marks 11 quarters of continual expansion.

The latest IPA Bellweather Report, the quarterly survey that polls 300 marketers from the UK’s top 1,000 businesses, has shown that just over a quarter of companies increased their marketing budgets in Q2 of this year. As just 13% reported a decline in their marketing budgets, this gives a net increase of +12.2%, topping the net growth of +11.8% seen in Q1 this year and +6.1% in Q4 2014.

In a breakdown of various marketing sectors, events seemed to fare the best, its net growth hitting a three-quarter high of +7.4%. Internet-based marketing performed slightly less well; while it still achieved +6.8% growth, this was a two and a half year low, with search & SEO marketing slipping from +8.5% to +6.5%. Most sectors achieved at least modest growth – main media advertising grew +1.7%, PR +1.1%, market research +0.6% and direct marketing +0.5% – apart from ‘other’, which had a net growth of -5.1%.

But it’s not all good news. Counterintuitive though it may seem, the overall increased spend is in spite of declining confidence in businesses’ own financial prospects. The survey revealed that the proportion of businesses feeling optimistic about their future cashflow dropped from 37.8% in Q1 down to 25.3% in Q2. Companies also had doubts about the financial prospects of their industries as a whole; last quarter just 13.1% felt optimistic about the future, compared with 26% the previous quarter.

 “With eleven quarters of successive growth in marketing budgets and a strong start to the financial year, this latest Bellwether is generally positive,” said Paul Bainsfair, director general of IPA. “With confidence on the wane, however, it is worth reminding marketers you won’t produce profits over time without maintaining brand-building ad spend. So while it is good to see sales promotion activity is on the increase, the industry must guard against short-termism.”

During uncertain times it is tempting to trim back anything that doesn’t feel like a mission critical expense. But it’s worth remembering: you gotta spend money to make money. 

Josh Russell
Josh Russell

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