IPA Bellwether Q1 2024 – Budgets cool, but events outperform

ipa-bellwether-q1-2024

Marketing budgets cooled in the first quarter of the year according the latest IPA Bellwether Q1 2024 survey, with the events sector continuing to break records.

The latest readings showed that while total marketing budgets saw second-strongest upturn since Q2 2022, growth cooled slightly from Q4 2023’s near decade peak.

Events budgets expanded at fastest rate on record, with 2024/25 expected to be another strong year for the segment.

The survey also noted that main media advertising budgets were revised lower for first time in three quarters.

Bellwether Q1 2024

The Bellwether survey said the first quarter of the year brought another solid expansion in total marketing budgets for the UK, stretching a run of growth that dates back to the second quarter of 2021.

A sustained upturn in marketing spend comes amid an improving economic backdrop for the UK economy, with an impending emergence from recession and falling inflationary pressures.

Just shy of one-quarter (24.4%) of panellists recorded an upward revision to their overall marketing budgets in Q1, compared to 15% that saw a contraction.

Although this led the net balance to fall to +9.4%, from +14.7% previously, it was nevertheless the second-highest in almost two years and

pointed to a solid quarterly expansion.

Events outshine

Events was the stand-out Bellwether category, recording a series-record expansion (net balance at +23.1%, from +15.9%) as companies continued to show a strong appetite for face-toface engagement with customers.

Direct marketing (+7.0%, from +12.6%) also extended its growth sequence, albeit with the upturn cooling slightly from its previous multi-year high.

Sales promotions budget growth (+4.9%, from +1.4%) gathered further momentum in the opening quarter of 2024, while expansions of a marginal nature were seen in market research (+1.4%, from -5.0%) and PR (+0.6%, from +1.9%).

Marketing budget declines were limited to just two categories in Q1, although one of which was the crucial main media segment (-0.7%, from +1.9%), signalling some caution towards big-ticket advertising campaigns.

According to more granular data on main media, the contraction was driven by out of home (-10.8%, from -8.1%), published brands (-5.7%, from -1.4%) and audio (-4.5%, from -7.0%).

This slightly offset growth in other online (+7.1%, from +13.2%) and video (+0.8%, from+6.6%).

Other marketing activity not already accounted for also saw budgets shrink in the first quarter (-4.3%, from -6.4%).

Paul Bainsfair, IPA Director General, said: “Spring is in the air, bringing with it a greater sense of optimism in the UK economy and in UK companies’ marketing spend intentions for the year ahead.

“Ahead of a suspected lightening-up on some economic pressures closer to home in the coming months, and despite wider geopolitical uncertainties, UK companies are once again recognising the value of advertising by revising their spend up this quarter.

“One note of caution, however, is that we seeing companies revert to upping their promotional spend while revising their main media spend down – a trend that had been bucked over the past couple of quarters.

“While sales promotions can stimulate short-term sales increases, the evidence also shows that their over-use can undermine a brand’s profit margins and pricing power over time by habituating consumers to buy mainly on price.

As always, a careful balance needs to be struck to ensure longer-term growth, for which greater investment in brand advertising particularly in main media, pays dividends.”

Commenting on the latest survey results, Joe Hayes, Principal Economist at S&P Global Market Intelligence, said: “Greenshoots of recovery are appearing across the UK economy. With business survey data suggesting UK GDP will expand in the first quarter, it’s no surprise to see another strong round of marketing budget growth.

Cost-of-living pressures and high borrowing costs have led households and businesses to retrench in recent times, making the market more competitive to earn and retain customer business.

Throughout this period, we’ve seen marketing perform strongly, so it’s very encouraging to see that firms are staying true to the course that has clearly yielded positive results.”