UK marketers have revised their internet budgets up to the greatest extent since the third quarter of 2007, according to the latest IPA Bellwether Report, published today (19 July).
However, while an increase in internet budgets in Q2 2017 has fuelled growth in overall marketing budgets, rising wider economic uncertainty has had a noticeable impact on companies’ financial prospects.
32% of the latest survey panel recorded an increase in internet marketing budgets, compared with a little over 9% of panellists that recorded a fall, providing a resulting net balance of +22.7% – up sharply since the previous quarter’s +16.9% and the highest reading since Q3 2007.
Within internet, search/SEO (+15.6%) and mobile (+3%) both continued to record upward revisions to growth, with the increase in spending related to search/SEO the highest recorded by the survey for two-and-a-half years.
Consequently, overall marketing budgets were also revised up in Q2.
Over 28% of the survey panel recorded an upward revision to marketing budgets, compared to around 15% that recorded a fall. The resulting net balance of +13.1% was up from Q1 2017’s +11.8% and the best recorded since Q3 2016.
Other categories to record upwards revisions to budgets include main media advertising, albeit to a slightly lesser degree than in the preceding quarter (net balance: +9.8%, down from +10.7%); PR (+2.1%); and events (+2.1%).
All of the remaining categories covered by the Bellwether survey showed reductions in budgets during the second quarter of 2017, including ‘other’ (-2.6%), direct marketing (-4.7%) and market research (-6.2%). The most notable reduction in budgets came from sales promotions which recorded a net balance of -10.7%, down on the previous quarter’s +1.2% and the weakest level recorded by the survey since Q2 2010.
Financial prospects
Despite overall growth, the latest report found that the upturn in uncertainty following the outcome of the recent snap general election, alongside the unknown effects on economic activity of the Brexit negotiations, had a noticeable impact on financial prospects during Q2 2017.
Although 30% of the survey panel are more optimistic regarding their own financial prospects, over 20% have become less confident.
Wider industry financial prospects also decreased. Over 26% of the survey panel signalled a reduction in optimism compared to three months ago when considering the financial prospects for their industry, while 14% indicated more confidence.
Economic forecasts
With no update from the Office for Budget Responsibility (OBR) since the previous Bellwether survey, the report’s annual adspend forecasts for the years through to 2020 are unchanged.
Driven primarily by an “underwhelming performance” in business investment, which is forecast to be depressed by the ongoing uncertainty caused by the UK’s decision to leave the European Union, the Bellwether authors expect adspend to rise by just 0.6% in real terms during 2017.
Rising inflation and an associated squeeze on household purchasing power is already weighing on consumer spending and this will impact UK adspend, the report concludes. This is expected to continue throughout the rest of 2017 and into 2018, and is a primary factor behind the expected stagnation of adspend next year.
A slight recovery is anticipated to take place during 2019 and 2020, with adspend forecast to rise by 1.8% and 2.3% respectively.
[Source:-mediatel]
