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UK marketing budgets grow for first time since pandemic began

UK marketing budgets increased for the first time since the end of 2019 in the second quarter of 2021, setting out the stall for the nation’s strong economic recovery after the COVID-19 pandemic, according to the latest IPA Bellwether Report.

A net balance of +6% of companies expanded their marketing budgets during Q2 2021, with 21.2% of those surveyed registering growth, compared to 15.2% reporting a decline. This also represented the sharpest increase in marketing expenditure since Q1 2019.

Looking at particular categories, public relations saw a net balance of +1.8% of businesses growing their spend, while main media and direct marketing budgets had net balances of +1.3% and +0.7% respectively. Breaking down main media budgets, video (+4.2%), audio (+1.1%), and other online advertising (+11%) all grew, but published brands (-6.1%) and out-of-home (-7.5%) continued on their downward trajectories.

The strongest decline for the quarter came from events (-24.7%), as you might expect. Sales promotions (-0.7%), market research (-9.6%), and other marketing (-2.5%) all also continued to slide.

“The economic data that has emerged in recent weeks tell us that UK businesses have embarked on what we hope will be a short road to recovery. The Q2 2021 Bellwether report was no different, and the strongest upward revision to total marketing spend since the beginning of 2019 is a great indication that firms have grown confident towards economic prospects,” said Joe Hayes, Senior Economist at HIS Markit and author of the Bellwether Report.

“We hope that this is just the beginning and the end of lockdown restrictions, further improvements in vaccination rates and buoyant consumer spending will support even stronger growth in marketing spend in the second half of the year.”

Looking forward, there is a generally positive outlook within the industry. 45.9% of those surveyed are more optimistic about their company’s financial prospects compared to three months ago, with just 11.4% feeling pessimistic. And, when asked about the financial prospects for the wider industry, there was a net balance on +21.1%.

The Bellwether report anticipates a stronger expansion in GDP this year, helped by the success of the UK’s vaccine programme and the re-opening of the economy. It’s predicted this will lead to ad spend growth of 7.5% in 2021 and 6% in 2022. However, it acknowledges that these forecasts could be at risk from factors including whether vaccines are as effective against new variants, and job losses once the furlough scheme comes to an end.

“These positive results mark the end of five quarters of continuous cuts. 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,” said Paul Bainsfair, IPA Director General. “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.”

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