A large number of brands saw their UK marketing budgets grow in the last quarter of 2023, and the balance between brands increasing budgets and those lowering budgets is the strongest it’s been for nearly a decade, according to the IPA’s latest Bellwether Report. Video was a significant beneficiary over this period, with a net balance of over six percent of those surveyed saying their video ad budgets increased during Q4.
However, sustained inflation means that while budgets may be rising, the report predicts 0.6 percent and 0.7 percent falls in ad spend in real terms for 2023 and 2024 respectively.
Marketing budgets on the rise…
The Bellwether Report surveys brands about how their marketing budgets changed in the previous quarter, as well as expectations for the year ahead. From the IPA’s data, 26 percent of advertisers who were surveyed said their UK marketing budgets grew in Q4 last year. Meanwhile 11.3 percent of panellists said their budgets fell. The net balance of +14.7 percent, which is the key figure used by the Bellwether to assess the health of the market, was the highest since Q2 2014.
The results for Q4 extended a growth streak (where this net balance is positive rather than negative) to 11 consecutive quarters.
It’s important to remember when interpreting this figure that it’s not a measure of total growth in marketing budgets. All marketers who are surveyed are weighted equally, and they are asked simply whether their marketing budgets grew or decreased, regardless of the size of change. It could be that those who reduced their budgets saw large falls, and those who increased saw minimal increases. Or it could be that major spenders registered falls, while those with small marketing spend in the first place were those who grew their budgets.
Nonetheless, the IPA’s figure is useful as an indicator of marketing spend trends across the whole economy, irrespective of sector-specific changes. And here the data is strong – far more advertisers are currently raising budgets than are reducing them.
… but main media ad spend growth low
Another important thing to note about the IPA’s data is it covers all marketing activity – including things like events and PR.
For main media ad spend, net growth was lower than headline figure, at +1.9 percent. There were mixed fortunes for different types of advertising. Video saw net growth of +6.6 percent, and other online advertising (not including direct marketing) saw +13.2 percent growth. But budgets for publisher brands saw a net fall of -1.4 percent, and audio saw a net fall of -7.0 percent).
Expectations for the 2024/2025 financial year are stronger. A net balance of 14.2 percent of marketers expect main media budgets to be higher for that period.
But growth looks set to be low, and not enough to outpace inflation. S&P, whose data is used in the Bellwether Report, expects the UK to be in a mild recession at the start of this year. And continued difficult economic circumstances mean ad spend is forecast to have been down by 0.6 percent in real terms last year, and 0.7 percent this year. The picture is brighter thereafter, with real growth of 1.1 percent forecasted for 2025.
