Bellwether budgets shine a light of optimism

Report reveals that UK marketing budget growth cools in Q1 but remains strong against yearly outlook

Georgie Moreton

Deputy Editor, BITE Creativebrief


“Spring is in the air, bringing with it a greater sense of optimism in the UK economy and in UK companies’ marketing spend intentions for the year ahead,” says Paul Bainsfair, IPA Director General. While budget growth may have cooled in Q1, the latest IPA Bellwether Report shows that companies continued to revise their marketing spend up once again.

It is a sustained upturn in marketing spend that comes with hope of an improving economic backdrop for the UK economy, allowing marketers a renewed sense of optimism. With signs of inflationary pressures and recession easing, the report finds that 24.4% of panellists recorded an upward revision to their overall marketing budgets in Q1, compared to just 15% that saw a contraction.

Growth fuelled by connection

Budget growth overall was largely led by investment into events, a stand out category within the report. The category saw growth of 7.2% (net balance at +23.1%, from +15.9%). A trend which reflects the ongoing desire to get face to face with customers and build stronger relationships. Similarly direct marketing (+7.0%, from +12.6%) experienced growth.

Commenting on the growth fuelled by a desire for deepening connections with consumers, Sue Benson, Managing Director, The Behaviours Agency and IPA City Head for Manchester & North West says, “What I find most fascinating is the growth in events and direct marketing budgets. My view is that consumer behaviour is still being impacted by the covid legacy and interaction with both humans and physical things is a much sought after experience and importantly driving the response metrics brands are looking for.”

Other categories that experienced growth included sales promotions budgets (+4.9%, from +1.4%), indicative of the ongoing need to relieve the pressures felt by consumers due to the cost of living crisis. While marginal growth was also seen in market research  (+1.4%, from -5.0%) and PR (+0.6%, from +1.9%).

Decline in budgets were seen in main media segment (-0.7%, from +1.9%) driven largely by  driven by subsector declines within out of home (-10.8%, from -8.1%), published brands (-5.7%, from -1.4%) and audio (-4.5%, from -7.0%). A cautiousness to invest in big-ticket advertising campaigns further evidences the shift toward deepening strong connection with audiences rather than big brand building awareness campaigns in the current economic landscape.

Yet, Patrick Reid, Group CEO, Imagination urges marketers to find balance. “Long-term brand building should remain at the forefront amid rising promotional spending. Aligning brand experiences across the different touchpoints with core values and harnessing authentic content created from experiences fosters trust and engagement and is crucial for navigating the dynamic marketing environment,” he says.

Looking forward with optimism

With a renewed positive outlook and budgets revised upward, in Q1, just shy of one-fifth (19.5%) of Bellwether survey respondents were more optimistic towards their industry's outlook than they were in the previous quarter.

40.7% of the survey panel have lifted the total amount available for marketing, compared to 18% reporting cuts. The resulting net balance of +22.8% signalled strong budget setting for 2024/25.

With marketers set to continue to invest in categories that experienced growth in Q1 such as events, PR and direct marketing, the trend of investment still shows cautiousness with investment into categories most likely to drive quicker results. 

“While sales promotions can stimulate short-term sales increases, the evidence also 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.” warns IPA Director General, Paul Bainsfair.

Much like Spring brings with it fresh energy, the Bellwether Report has also been accompanied by a host of positive and improving business survey data that indicate that the UK recession will be short-lived. S&P Global Market Intelligence have subsequently revised their forecast for UK GDP in 2024, expecting growth (0.2%), rather than a small contraction (-0.1% previously estimated).

The report sees growth forecasts improve to 1.2% for 2025 and 1.9% in both 2026 and 2027.

Soon lower inflation and less borrowing costs should support household real incomes, driving the UK economy forward. For marketers the news still means tread carefully, but with renewed hope of opportunity to come.

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