According to the IPA: 22% of companies reported an upward revision to their marketing budgets during the latest survey period, compared to 15% that indicated trimming, the resulting net balance of +7.3% was the highest since Q3 2007.
(The net balance is calculated by subtracting the percentage reporting a downward revision from the percentage reporting an upward revision.)
The positive showing for Q2 will bolster hopes that the sustained period of marketing cuts that have been evident since the beginning of the financial crisis will come to an end this year. A net balance of +13.5% of companies have pencilled in a net increase in marketing budgets during 2013 as a whole, the most positive forecast for two years.
The marked upward revision to total marketing budgets in Q2 was accompanied by growing confidence amongst companies regarding their financial prospects. Companies are at their most upbeat since Q3 2009 (a net balance of +27.6% being a sharp improvement on Q1’s +16.8%).
Bellwether has long been seen as a predictor of the overall state of the economy in the UK. The evidence provided in the Q2 2013 report adds to evidence that the UK economy is strengthening heading into the second half of 2013.
By sector, data has shown that once again internet is the key driver to overall budget growth, with anet balance of +17.4%, a stark improvement on the previous quarter’s +8.9% and the best reading since Q1 2010. A further four categories also registered upward revisions to budgets led by PR, with a net balance of +3.4%, the highest in three quarters of data collection. Sales promotion (+2.0%) main media advertising (+1.9%) and direct marketing (+0.6%) also recorded upward budget revisions. Market research budgets were unchanged. However, there were falls seen in ‘other’ (-3.2%) and events (-0.9%).
Says IPA Director General Paul Bainsfair; “This is very encouraging; with the upward revision of marketing spend in Q2 the highest for almost six years. Companies are beginning to shake off the cloak of recession and are becoming more confident in the economy. This bodes extremely well for continued growth in marketing spend for the rest of 2013. These figures should send a very upbeat message to the wider economy”.
Says Chris Williamson Chief Economist at Markit and author of the Bellwether report; “The second quarter is looking like one of the best we've seen since the onset of the financial crisis in terms of a positive signal for marketing budgets and the wider economy.
The latest Bellwether survey shows companies taking an increasingly aggressive stance with regard to boosting their marketing expenditure, which in turn reflects their views on financial prospects having improved dramatically over the course of the year to date. Marketing spend looks set to rise in 2013 for the first time in six years as companies finally perceive a brightening business outlook at home and abroad.
With marketing spend a key barometer of the health of the economy, not only is GDP growth likely to have accelerated in the second quarter, but the Office for Budget Responsibility's official forecast of 0.6% economic growth this year is all of a sudden starting to look overly pessimistic.”
The Bellwether Report is researched and published by Markit Economics on behalf of the IPA. First published on the 17th July 2000, it features original data drawn from a panel of around 300 UK marketing professionals and provides a key indicator of the health of the economy.
