Marketers are more confident that direct marketing budgets will rise this year than at any time in the past decade, according to the IPA’s Bellwether Report for Q4 2017, despite DM budgets being revised lower for the second time in the past three quarters.
Although just shy of 12% of panellists recorded an upward revision to direct marketing budgets, around 16% indicated a reduction. The resulting net balance of -4.5% was well down on the previous quarter’s +0.0%. Direct marketing budgets have risen just once in the past year and the category continues to under-perform when compared to total marketing.
Nonetheless, marketing executives are optimistic about this year’s direct marketing budgets, with a net balance of +16.7% of respondents forecasting growth. That’s the highest reading seen for this category since 2007’s +21.6%
Overall, marketing budgets of UK private sector companies continued to rise during the final quarter, although this was at the slowest rate for two years.
The data shows that 23.9% of marketing executives raised their budgets during the latest survey period, generally as part of efforts to support brands, aid the launch of new products or in response to greater competition. However, cost pressures led in some cases to budget realignments as part of wider company efforts to protect profitability. There were reports of client caution and ongoing economic uncertainty weighing on sales, and these factors led to 15.2% of panellists reporting a cut to their total marketing budgets.
The resulting net balance of +8.6% was down from +9.9% in the previous quarter and the lowest since the start of 2016. Although growth has weakened for a second successive quarter, marketing budgets have been continuously expanded since the end of 2012.
Internet marketing spend is still on the up, of course, extending a run of growth in this Bellwether category to eight-and-a-half years. However, the respective net balance of +10.9% was notably down on the previous survey’s +17.0% and the lowest recorded since Q3 2016.
Other Bellwether categories to register expanded budgets during the latest survey period were events and main media advertising.
Marketing budgets for all other Bellwether categories were reduced during the final quarter of 2017. PR recorded the lowest net balance (-6.6%, down from +7.2%), followed by other (-5.8%, from +2.3%) and market research (-5.4%, compared to Q3’s -2.4%). Meanwhile, direct marketing (-4.5%) and sales promotions (-3.0%) both returned to contraction territory following stagnations in the previous survey period.
IPA director general Paul Bainsfair said: “Looking at quarter-on-quarter results it is clear that uncertainty from the wider geo-political situation continues to affect a cautious approach from marketers regarding their budgets.
“That having been said, we must take comfort in the fact that budgets have been revised up overall in Q4 and that as ever the ability for advertising to drive business growth cannot be underestimated.”
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