UK marketing budgets were revised up to a nearly eight-year high during the first quarter of 2022, as pandemic-related concerns continue to fade away, according to the latest IPA Bellwether Report.
Of the panellists surveyed, 24.1% upwardly revised their total marketing budgets, compared to just 10% of companies which reported budget cuts. The net balance of +14.1% recorded is the highest since Q2 2014, and represents the fourth successive quarter of marketing spend growth.
“With COVID-19 restrictions ending, it is clear that UK companies are keen to capitalise on this moment and ramp up their marketing spend. This is welcome news now, but we know we face soaring inflation levels, cost of living increases, supply-chain issues, all exacerbated by the war in Ukraine and some sector recruitment shortages,” said Paul Bainsfair, IPA Director General.
“With forty years of downturn data to learn from, the IPA knows beyond doubt that brands do best when they maintain their investment in longer-term brand-building media, complemented by a smaller ratio of sales activation media. This is the survival code for surviving a downturn.”
The events category was the top-performing segment in Q1 2022, achieving a net balance of +18.7%, as businesses began to confidently plan large-scale gatherings and exhibitions thanks to the UK government’s decision to remove all COVID-related restrictions.
The media segment also delivered solid growth in the quarter, reaching +9.4%. This was driven by other online (+18.6%), video (+9%), and published brands (+1.3%). However, out-of-home (-4.6%) and audio (-8.5%) continued to struggle.
The other categories to witness budget expansions were sales promotions (+8%), direct marketing (+6%), and PR (+0.6%).
On the other hand, the market research (-3.5%) and ‘other’ (-0.9%) segments slightly weighed down overall marketing growth.
“As the UK switches its approach from stopping COVID-19 to living with COVID-19, many businesses have begun adjusting to a post-pandemic world. We’ve seen strong upward revisions to marketing budgets in a clear sign that companies are gearing up for growth. Events budgets, which saw a particularly strong uplift, were a notable beneficiary of the UK government’s new COVID-19 model,” said Joe Hayes, Senior Economist at S&P Global and author of the Bellwether Report.
“That said, risks to the economic outlook have built substantially so far this year. Living costs are rising, we may see inflation get close to or even hit double digits in the coming months, and this will weigh on purchasing power. Supply chain issues are still prevalent and have been exacerbated by the war in Ukraine. Rising geopolitical tensions also create uncertainty, and it may lead to companies re-assessing their decisions until all of these risks reduce.”
Marketers were very positive about the future of their budgets, with 43.8% of respondents expecting growth in their marketing spend in the coming year, compared to 10.6% expecting cuts. All marketing areas are expected to receive a boost, but events (+22.1%) and main media (20.1%) are set to be the big winners.
Though marketers were, generally, optimistic about their financial outlook – with a net balance of +6.6% recorded – the figure was the weakest since Q3 2020. Moreover, there is pessimism when it comes to the prospects of the industry as a whole, with -3.6% of companies lacking confidence.
The Bellwether’s forecasts echo the feelings of marketers, with growth predictions revised down to 3.5% and 1.8% for 2022 and 2023, from 5.2% and 2.5%, respectively.