UK marketing budgets have stalled in the second quarter of 2019, despite the year’s surprising positive start in Q1, as a result of continued uncertainty over Brexit and political leadership.
The latest IPA Bellwether shows that the 8.7 per cent growth in the first quarter was short-lived, slowing to zero in Q2. The Q1 growth has been attributed to companies taking a more proactive approach to offset risks to their businesses. In the second quarter, the 20 per cent reporting greater marketing spend was completely offset by those cutting expenditure, with the remaining 60 per cent keeping budgets as they were.
There was a net balance of +11.5 per cent of firms reporting budget growth on internet-based advertising, down from +17.2 per cent in Q1 2019. Within this, search and SEO budgets grew +9.9 per cent compared to +14.2 per cent in the first quarter.
Main media (+5.6 per cent in Q2 versus +5.2 per cent in Q1) and events (+4.8 per cent from +3.4 per cent) were the only other categories to register growth in the second quarter.
“Between Boris, Jeremy and Brexit, coupled with a dip in consumer confidence, it is perhaps no wonder that this quarter’s Bellwether shows zero growth to overall UK marketing budgets,” said Paul Bainsfair, IPA director general. “Until a clearer political and economic path is outlined, the vast majority of companies are locked in stasis. It is reassuring to see, however, that some companies are revising up their investment in main media advertising; this is where they will build the longer term growth of their brands, which is crucial to weathering these tougher times.”
On the other hand, market research (-2.8 per cent from -4.2 per cent) was reduced for the 16th consecutive quarter, while PR (-5.2 per cent from zero per cent), sales (-7.1 per cent from -3.7 per cent), direct marketing (-9 per cent from -3.5 per cent), and other advertising (-12.8 per cent from -5.4 per cent) were all hit by spending reductions.
Looking ahead, the IPA’s Bellwether panel is negative about what’s to come, with 34 per cent reporting a pessimistic outlook toward finances in their industry, compared with just eight per cent that are optimistic – a net balance of -25.6 per cent. A net balance of -9.8 per cent was recorded when the same panel was asked about how their feelings toward their own financial prospects.
The report expects a modest annual increase of only 1.1 per cent in ad spend over the year as a whole, pointing to Brexit and other political uncertainty, as well as the largely negative state of the UK economy, for remaining cautious. Nonetheless, there is a more positive outlook for 2020 and beyond.