UK marketing budgets get a surprise boost
British companies spent more on marketing in the opening quarter of 2019 despite uncertainty around Brexit, but their budgets for the rest of the year could be the most subdued since after the financial crisis, a survey shows.
The IPA Bellwether survey, conducted by IHS Markit, showed on Wednesday that 21.6% of marketing executives raised their budgets during the quarter, while just under 12.8% of executives who took part in the survey cut their marketing budgets.
“This sharp increase following Q4 2018’s flatlining signals that UK marketing budgets have received a much-needed kiss of life in an economy gripped by Brexit uncertainty,” IPA director general Paul Bainsfair said.
Bainsfair, however, added that the forecast for 2019 was uncertain given the seemingly endless negotiations around Britain’s exit from the EU.
The report showed that cautious undertones were still apparent in budget plans for the current financial year, with panellists providing only modest growth expectations in available marketing spend.
Brexit was postponed by a late-night agreement in Brussels last week that gave Prime Minister Theresa May until October 31 to persuade parliament to approve the terms of the country’s departure.
“A return to growth in marketing budgets during the opening quarter of 2019 may come as a surprise given that the uncertainty that shrouds the UK political and economic climate has only built further,” said Joe Hayes, economist at IHS Markit.
A six-year run of marketing spending growth at British companies ended in the final quarter of 2018 as uncertainty over Brexit led companies to clamp down on costs. While Brexit uncertainty continued to prompt belt tightening and a delay in decision-making, some companies pushed resources into their brands in the first quarter, the report showed.
The survey found that the best-performing category was internet with its net balance seen at a growth of 17.2% in the quarter. The rise in marketing spend was supported by demand for big-ticket advertising campaigns such as those on TV and radio.
The survey also flagged that marketing executives expect further growth in traditional media advertising in 2019.
Around 300 UK marketing professionals, primarily from Britain’s top 1,000 companies and across all key business sectors, were interviewed for the survey.