BUSINESSES appear to be sufficiently bullish about their prospects, it is estimated they are revising their marketing budgets upwards – for the eighth consecutive quarter-year.
Adds the Q3 2014 Bellwether Report, published yesterday by the Institute of Practitioners in Advertising, not only are marketing budgets being revised upwards for the eighth consecutive quarter, but they have been revised to “the third-highest level in the survey’s history”.
The report, which has been conducted on a quarterly basis since Q1 2000, revealed a net balance* of +12.6 per cent of companies registering an increase in budgets during Q3 2014.
Continues the report: “Although this is down for a second quarter running (from previous record survey highs in Q1: +20.4 per cent and Q2: +15.2 per cent), this latest positive outturn extends an already unprecedented period of growth as firms sought to take advantage of a positive trading environment and bolster sales with high-profile and targeted marketing campaigns.
“The ongoing upward revision to marketing budgets reflected the continued optimism of companies regarding their own financial prospects. A net balance of +38.6 per cent of companies indicated they had grown more optimistic compared to three months ago, up from +37.5 per cent in Q2. Confidence regarding wider industry financial industry prospects also remained high, despite the net balance slipping to a five-quarter low of +30.4 per cent, from +33.0 per cent in Q2.
“In terms of actual spend, the Q3 survey marks the mid-point of the 2014/15 financial year and suggests that full-year marketing budgets are on course to be higher than those initially set earlier in the year, when marketing executives were at their most upbeat for seven years. A net balance* of +26.0 per cent of companies recorded an uplift in their marketing budgets, relative to the 2013/14 accounting period.
“Additionally, in line with upbeat economic data showing an increasingly positive UK business climate as companies invest more in brand building and expanding their sales, the Bellwether predicts an adspend growth of seven per cent in 2014. However, with this growth, there is an increased chance of higher interest rates which the Bellwether predicts will slow growth. It therefore forecasts lower adspend growth of 3.8 per cent in 2015.”
By sector, the report continues: “The sharpest upward revisions to marketing budgets were made to internet (+14.5 per cent) and main media advertising (+9.2 per cent). The net balance to internet was fractionally below the Q2 one-year high of 14.7 per cent. Within internet, search recorded a net balance increase of +9.4 per cent, which despite being the weakest since the Q4 2013 Bellwether survey, extended the current run of growth to 21 successive quarters. Main media advertising was at the joint-third highest in the survey history, although down from 11.5 per cent in Q2.
“Events also recorded a marked upward revision to budgets, with a net balance of +7.8 per cent and modest upward revisions were seen for direct marketing (+2.1 per cent) and PR (+one per cent).
“In contrast, there were reductions in budgets for sales promotions (-1.1 per cent), market research (-1.7 per cent) and other (-4.7 per cent).”
* ‘Net balance’ is calculated by subtracting the percentage reporting a downward revision from the percentage reporting an upward revision.
Source: Q3 2014 IPA Bellwether Report, published October 15 2014.