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UK Marketing Budgets Expand for The First Time Since The Pandemic Began, Says IPA Bellwether

  15 July, 2021

Marketing budgets expanded for the first time since Q4 2019, according to the IPA Bellwether Report released today. A net balance of six percent of companies surveyed expanded their marketing budgets in Q2 2021. Just over a fifth of panellists reported growth (21.1 percent) compared to 15.2 percent reporting a decline. This represents a much better picture than the Bellwether report from last quarter, when a net balance of 11.5 percent of companies said they were cutting their budgets. 

Video budgets continued to grow in Q2 2021, they had an increase in growth at 4.2 percent compared to 3.3 percent last quarter. Video has continued to prosper as the sector recovers from the pandemic as other areas like out-of-home and published brands falter. Out-of-home and published brands did see less of a budget cut than last quarter, with published brands down 6.1 percent compared to -22.2 percent, and out of home down 7.5 percent from -24.1 percent.

Businesses also invested more heavily in other online advertising in Q2 2021, according to the report. Whereas budgets had remained steady in Q1 2021, this quarter they were up 11 percent for other online advertising. 

Overall, the Bellwether Report predicts good growth in ad spend in 2021 and 2022, at 7.5 percent and six percent respectively. The IPA attributes the better growth to the sentiment it gauged from its panel members, that businesses feel more confident about economic growth due to strong vaccine uptake and virus suppression measures. 

This confidence was reflected in the Bellwether Report’s survey figures. The survey found that 45.6 percent of their panel members became more optimistic about their company’s financial prospects compared to three months ago, with only 11.4 percent saying they felt more pessimistic. However, this net balance of 34.6 percent did represent a lower figure than the Q1 2021 figure of 36.6 percent. 

Paul Bainsfair, director general of the IPA, said now was the time for companies to be increasing their ad spend. 

“These positive results mark the end of five quarters of continuous cuts,” he said. “For revisions to UK marketing budgets to bounce back so quickly and strongly, following their nadir at the height of COVID-19 restrictions in Q2 2020, is very welcome news and corroborates our Bellwether prediction for a V-shaped recovery. As the vaccination rollout continues at pace and UK plc gears itself up for growth, we encourage companies to ramp up their advertising to make the most of post-lockdown, pent-up consumer demand.”

However, the IPA does acknowledge there are risks to the economic recovery, with new variants on the horizon and a likely increase in tax to recoup pandemic support costs. 

For most in the industry, this report signals good news. Nick Reid, regional VP of Northern Europe at DoubleVerify says that this is a good moment for the advertising industry to rebuild anew. 

“With this quarter’s Bellwether Report anticipating 2021 and 2022 will record strong rates of growth in ad spend [..] it is clear that the industry is aiming towards recovery. Brands, agencies and vendors must take this moment to reset and drive an improved ecosystem; one with clear baselines of media quality, accurate performance and relevant, privacy-friendly experiences,” Reid said. 

Those in the video ad world drew attention to the strong results there. TVSquared’s CEO and founder Calum Smeaton points out that the growth figures may actually underestimate how well TV is doing.

“Sentiment for total marketing budgets is positive, reflecting the country’s optimism as lockdown protocols are continuing to ease, and economic confidence returns. Looking specifically at video budgets, they’ve been revised +4.2 percent,” said TVSquared’s founder and CEO, Calum Smeaton, “That said, this doesn’t accurately reflect the growth that converged TV – linear and streaming – has experienced, as IPA’s video category also incorporates cinema, which has inevitably struggled.”

 

2021-07-15T12:01:13+01:00
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