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The quarterly IPA Bellwether Report, which surveys marketers for a taster of expected budgets for the coming year, has found that in Q2 2021 total UK marketing budgets expanded for the first time since Q4 2019 – welcome news for most in the industry. 

The report questioned some 300 UK-based companies for information on trends in their marketing activities to detail what the rest of the industry can expect. An additional survey panel of 1,000 handpicked professionals then added additional insight.

What you need to know

  • A net balance of 6.0% expanded total marketing budgets during Q2. More than one in five (21.2%) panelists registered growth, compared to 15.2% with a decline. It’s a small chunk, but a significant shift. 

  • It’s the first hint of budget growth for many marketers since Christmas 2019. Last quarter some 11.5% of firms recorded spending cuts. IPA is confident we’ve now seen an end to a five-quarter sequence of continual cuts.

  • Chris Daly, chief executive of the Chartered Institute of Marketing, says “it is a relief” to see budgets bounce back. “Now, as the UK prepares to come out of lockdown, we can be optimistic that the marketing industry will play a critical role to economic recovery, supporting businesses of all sizes to adapt, grow and reconnect with customers.”

  • Strong vaccination uptake and the end of virus containment measures supported expectations of an economic recovery. Many firms are anticipating strong sales as consumers unleash demand, which has been pent up over the course of the pandemic. These were all cited as reasons for these newly-sprouting budgets.

  • Not all categories grow equally. PR led the upturn with a net balance of +1.8% of firms (up from -8.0% in Q1). The key segment of marketing, main media, also recorded a net balance of +1.3% (up from -8.2%).

  • In main media, video was +4.2%, from +3.3%, audio was +1.1%, from -9.0% and other online advertising grew +11.0% from flat. Downwardly revised were published brands to -6.1%, from -22.2% and out-of-home to -7.5%, from -24.1%.

  • There was a slight uptick in direct marketing budgets to +0.7%, from -11.8%. Dipping steeply were sales promotions to -0.7%, from -16.2%, market research to-9.6%, from -17.8%, and ‘other’ to -2.5%, from -14.7%. And finally, with continued restrictions on large gatherings, events budgets registered the strongest decline at -24.7%, from -43.2%.

  • 2021 and 2022 are to record ‘strong rates of growth’ in adspend, expansions of 7.5% and 6.0% respectively.

What the industry says

  • First, the IPA panel took the pulse of 1,000 marketers. 45.9% were becoming more optimistic regarding their company’s financial prospects compared to three months ago. Only 11.4% signaled pessimism. 34.6% indicated a strong overall level of confidence. That balance was ‘slightly lower than in the first quarter’, even though this time some budgets had recovered.

  • Paul Bainsfair, IPA director general, says: “For revisions to UK marketing budgets to bounce back so quickly and strongly, following their nadir at the height of Covid-19 restrictions in Q2 2020, is very welcome news and corroborates our Bellwether prediction for a V-shaped recovery. As the vaccination rollout continues at pace and UK PLC gears itself up for growth, we encourage companies to ramp up their advertising to make the most of post-lockdown, pent-up consumer demand.”

  • Nicole Lonsdale, chief client officer, OOH giant Kinetic UK, says: “The OOH sector is under no illusions that the world will be as it was in 2019 – consumers will want to get out and experience the world more than ever, but some behaviors and patterns of activity will be different for a while to come, whether that’s how they shop, socialize or commute. The investment in digital technology, automation and data optimization capability that took place during the last 18 months is now delivering richer, near-real-time insights into audience mobility and behavior.”

  • Richard Kelly, chief revenue officer of Mindshare UK, says it is “fantastic news” to see such a strong recovery in “almost” all main media. “A return in confidence will stimulate both strategic thinking and creative experimentation to ensure brands are reaching people through emerging smart opportunities in TV, increasingly digitized OOH media, blended content and commerce and the increasingly diverse array of social, influencer, video, news and entertainment channels.”

  • Neil McKinnon, marketing director, Infectious Media, part of Kepler Group, says: “With more restricted budgets we saw big shifts to more accountable media spend and as was seen in previous recessions, we expect these changes to be permanent to a large extent. Going forward the digital media space will be all about intelligent growth.”

  • Phil Duffield, vice-president UK at The Trade Desk, says: “If the last five quarters have taught us anything, it’s to expect the unexpected. Consumer behaviors may never return to the predictable patterns we once knew, so decision-makers will need to remain agile in their approach. This is where the beauty of data-driven advertising truly lies – in its ability to allow marketers to remain nimble and flex campaigns as needed. I’m optimistic that marketers who adopt the right tech – with the capability to adapt spend according to what’s working and what isn’t – will have plenty of reasons to be positive going forward.”

  • And finally, Louise Ainsworth, executive managing director, EMEA at Kantar’s Media division, says recent forecasts will lift the moods of advertisers and marketers. “As people head back to shops, restaurants and offices, businesses must carefully consider how and where they position themselves to make the most of rising confidence and capture spend from those with extra funds in their pockets after 18 months of restrictions. Competition to secure a slice of post-lockdown spend will be fierce, meaning it’s more important than ever to ensure increased advertising budgets are highly targeted and that campaigns achieve real cut-through.”

Check out previous reports here.