Introduction
The UK IPA Bellwether Report, published by S&P Global on behalf of the Institute of Practitioners in Advertising (IPA), provides critical insights into the state of the UK economy through the lens of marketing budget trends. This report is based on data collected from around 300 UK marketing professionals, representing a broad range of business sectors. It serves as a barometer for economic health and marketing expenditure trends.
Key Findings
Marketing Budget Growth
- The second quarter (Q2) of 2024 saw a significant increase in UK marketing budgets, the strongest upward revision since Q1 2014. The net balance rose from +9.4% in Q1 to +15.9% in Q2.
- Marketing budget growth was observed across all major categories, with events leading the charge.
- Business confidence also saw a notable improvement, with the most positive outlook in nearly three years.
Budget Revisions by Category
Events
- Events marketing continued to see robust growth, with a net balance of +17.2%, although slightly down from +23.1% in the previous quarter. This indicates strong continued interest in in-person client interactions.
Direct Marketing
- Direct marketing budgets increased for the sixth consecutive quarter, with a net balance of +8.9%, up from +7.0% in Q1.
Main Media Advertising
- Main media advertising budgets returned to growth with a net balance of +3.5%, driven primarily by other online advertising (+15.3%) and video (+7.8%). However, audio and published brands continued to see declines.
Sales Promotions
- Sales promotions saw their third consecutive quarterly increase, with a net balance rising to +6.9% from +4.9% in Q1.
Public Relations (PR)
- PR budgets experienced a modest increase with a net balance of +2.6%, up from +0.6% in Q1.
Market Research
- Budgets for market research rose with a net balance of +3.2%, the highest since Q4 2021, contrasting with the anticipated budget cuts for 2024/25.
Other Marketing Activities
- The 'other' marketing category saw a stronger decline, with a net balance of -7.6%, down from -4.3% in Q1.
Opportunities and Threats
Opportunities
- Political and economic stability post-election were seen as significant opportunities.
- Major events like the European Football Championships, Wimbledon, and the Olympics were expected to drive promotional material demand.
- The rise of artificial intelligence (AI) and its effective utilization was highlighted as a key growth area.
- Sustainability and digitalization continued to be important themes.
Threats
- Concerns about the impact of generative AI, economic uncertainty, and high running costs were prevalent.
- Household financial strains and high-interest rates were noted as challenges.
- Market uncertainties from global political events, such as elections in the US and France, were also mentioned.
Business and Financial Prospects
- Optimism towards company-specific financial prospects increased, with a net balance of +13.6%, the highest since Q3 2021.
- Industry-wide financial prospects remained pessimistic but showed improvement with a net balance of -4.1%, the least negative since Q1 2022.
Economic Forecasts and Employment Prospects
Economic Forecasts
- The UK economy showed signs of recovery with an anticipated GDP growth of 0.6% for 2024, up from the previous forecast of 0.2%.
- Adspend was expected to remain flat in 2024 but to grow modestly from 2025 onwards, with forecasts of 1.2%, 1.7%, and 1.9% for 2025, 2026, and 2027, respectively.
Employment Prospects
- Hiring intentions were positive, with a net balance of +16.6%, indicating strong recruitment plans in response to increased marketing budgets.
Detailed Category Analysis
Main Media Advertising
- Positive revisions were seen in other online (+15.3%) and video (+7.8%) categories, while out of home (0.0%) remained stable. Audio (-5.5%) and published brands (-6.3%) saw declines.
Direct Marketing and Sales Promotions
- Direct marketing continued its upward trajectory, with a net balance of +8.9%. Sales promotions also grew, with a net balance of +6.9%.
Public Relations and Market Research
- PR budgets increased slightly, while market research budgets saw a significant uptick.
Events and Other Marketing
- Events marketing maintained strong growth, although slightly down from the previous quarter. The 'other' category experienced a sharper decline.
Conclusion
The Q2 2024 Bellwether Report paints a positive picture of the UK marketing landscape, with significant budget increases across various categories, reflecting broader economic optimism and improved business confidence. However, challenges such as economic uncertainty, high costs, and global political events remain pertinent. The continued rise in direct marketing and events spending underscores the evolving strategies companies are employing to engage their audiences effectively.
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