The impacts of Brexit on the UK economy remain unknown, but the degree of certainty brought by Boris Johnson’s election victory seems to have made itself felt in marketing circles, with both measures of industry health in the IPA’s quarterly Bellwether Report moving into positive territory.
A net balance of 4% of businesses surveyed revised their marketing budgets upwards in the fourth quarter of 2019 – with 23% of companies seeing budget growth and 19% experiencing cuts.
While the net balance is lower than it has been at most points in recent years, it represents a bounceback from last quarter’s figure of -0.5%, marking the first time in seven years that the figure had fallen below zero.
Broken down by sector, internet was again the best performer, with a net balance of 7.9% revising budgets up this quarter, although this figure is lower than in the previous two quarters. There was a slight net increase for main media advertising, although all other sectors experienced a negative net balance.
Meanwhile, marketers were more positive than negative about the prospects of their own companies for the first time since 2018, with a net balance of 1% anticipating growth. This is a significant improvement on last quarter, when the figure was -9.4%, meaning significantly more businesses expressed negative than positive views.
As usual, brands were much more pessimistic about their prospects of their industries than their own businesses, although this measure also saw an improvement, with a net balance of -21%, up from -25% last quarter.
In addition, the Bellwether also surveyed companies on their marketing plans for the 2020/21 budgeting year and the results of this indicate significant positive movement, with a net balance of 15.7% expecting their total marketing budgets to be upwardly revised. That compares with a net balance of just 3.4% who said the same thing a year earlier.
The Bellwether’s authors said the new era of stable government meant "conditions for marketing spend have become notably more favourable". They predicted that 2020 would be a stronger year than 2019, with adspend growth of 1.8%, and that this would accelerate in each of the next three years, with growth hitting 3.1% in 2023.
IPA director-general Paul Bainsfair said: "This latest IPA Bellwether Report demonstrates the extent to which UK marketing budget planning has been at the mercy of the unstable political environment. Over the past year, we have seen a stagnation in marketing budgets, culminating in a below-zero score last quarter.
"And yet now, with the clear result of December’s general election, we are seeing a return to positivity in terms of UK companies’ confidence regarding their own financial prospects and in terms of their budgeting plans – up marginally this quarter and significantly for 2020/21.
"With Brexit still looming, I’m sure it won’t be plain sailing, but these forecasts provide an upbeat outlook for the year ahead for UK plc, their marketers and, of course, the agencies that work with them to grow their businesses."