The prospects for direct marketing spend have received yet another boost this week with the latest IPA Bellwether Report predicting that in the forthcoming 2017/18 financial year, with 14.4% of companies forecasting budget expansion for DM techniques.
While DM budgets were unchanged during the final quarter of 2016, with exactly the same proportion of panellists (14.7%) indicating growth as decline, the future looks more promising.
The resulting net balance of 0.0% for Q4 compared to a net balance for Q3 of +4.9%, which had been the first growth in DM budgets in over a year.
Overall, UK marketers have revised their budgets up in Q1 2017, with significant growth recorded in Internet and advertising categories. The latest results extend the record run of growth to marketing budgets to four-and-a-half years and detail marketers’ positive budget plans for 2017/18.
The report, which has been conducted on a quarterly basis since Q1 2000, reveals a net balance of +11.8% of companies registering an increase to their budgets during Q1 2017, down only fractionally from Q4 2016’s net balance of +12.9%. (The net balance is calculated by subtracting the percentage reporting a downward revision from the percentage reporting an upward revision).
Looking ahead to 2017/18 budget plans, UK marketers have indicated a positive outlook, with a net balance of +26.1% of companies signalling growth in their total budgets for the coming year. Although indicative of a marked degree of confidence, notably year ahead expectations continue to lag those seen prior to the start of the global financial crisis in 2008.
The latest survey again highlighted that budgets were raised across a broad-range of Bellwether categories, led by internet where growth picked up to the highest recorded in just under four years (net balance: +16.9%, from Q4 2016’s +12.1%).
Within this category, marketing activities related to search/SEO rose to the greatest degree in over two years, as highlighted by the net balance improving to +15.1% (from +7.1% in the preceding quarter).
Mobile-based advertising also picked up, with the net balance of +10.3% (Q4 2016: +3.9%) the highest recorded in the short three-quarter series history.
Latest data revealed an improvement in company financial prospects during the first quarter of 2017. With over 32% of the survey panel indicating positive financial prospects, compared to under 19% that indicated a fall, the respective net balance of +13.9% was up from +11.2% in the previous survey period and the best recorded in over a year. That said, the degree of confidence remains well down on those levels seen over the period 2013-2015.
With the UK economy showing considerably more resilience during the second half of 2016 than was generally envisaged by economic commentators, this momentum is now forecast to carry through into 2017.
Paul Smith, a senior Economist at IHS Markit, said: “The Q1 2017 Bellwether survey paints a picture of a solidly growing UK economy,with companies continuing to show a willingness to commit increased resources to marketing and capitalise on current positive sales trends.
“Given the prevailing backdrop of Brexit-related economic uncertainties, a key question is whether the resilience in spend shown post referendum can be maintained. At present, marketers seem confident, with both sentiment around their own company financial prospects and budgets for the year ahead remaining inside positive territory.
“But perhaps reflect of the relative limbo we find ourselves in ahead of the start of negotiations between Britain and the EU, degrees of confidence remain historically low and panellists continue to note plenty of threats to the outlook.”
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