Total UK marketing budgets have been revised up for the second quarter of 2021, for the first time since Q4 of 2019. They also climbed at the steepest trajectory since Q1 of that year, according to the latest IPA Bellwether Report.
A net balance of 6% of companies surveyed said they had expanded their total marketing budgets during the second quarter of 2021, with 21.2% of respondents registering growth and 15.2% reporting a decline.
The Q2 findings contrasted strongly with the first three months of 2021 – when a net balance of -11.5% of companies recorded spending cuts – and bring an end to five consecutive quarters of marketing spend decline.
Mainstream media and PR driving growth
Breaking the findings down into marketing categories, of the three that drove the upsurge, PR contributed most strongly, with a net balance of 1.8% of firms boosting spend (up from -8% in Q1). Spend on mainstream media came next, with 1.3% of companies raising budgets (versus -8.2% in Q1). Within that category, video, audio and online all grew – at 4.2%, 1.1% and 11% respectively – while published brands and out of home were revised down, by -6.1% and -7.5%.
Direct marketing was the third category to experience a boost, albeit a marginal 0.7% (compared with -11.8% in Q1). Other categories were cut back, including sales promotions (-0.7%) and market research (-9.6%).
Not surprisingly, events continued to bear the brunt of lockdown and its attendant restrictions on large gatherings. The category recorded a fall of 24.7%, against -43.2% in Q1.
Meanwhile, 45.9% of marketers were more hopeful than they were three months ago about their own company's financial prospects, and just 11.4% more pessimistic. This has led to a net balance of 34.6%, which is just short of last quarter's 36.6%, but marks the second-highest reading since Q1 of 2015.
Quizzed about the financial prospects of the broader industry, a net balance of 21.1% companies were more bullish than in Q1.
Marketers are optimistic about the months and years ahead, the Bellwether Report found, thanks to vaccinations and a reopening of the economy. Savings made during lockdown are expected to drive greater household spending.
The IPA's report also predicted that adspend will grow 7.5% in 2021 and 6% in 2022. Beyond that, growth will temper, to 2.7% in 2023 and 1.2% and 2.4% in 2024 and 2025 respectively.
The study also delved into anecdotal marketer sentiment via qualitative research. Marketers said they were encouraged by strong vaccination uptake and lockdown easing measures, which they believe support expectations around economic recovery.
Pent-up demand to unleash
Advertisers are anticipating strong sales as consumers "unleash demand which has been pent up" during the pandemic.
It was a point that resonated with Zack Sullivan, Future's chief revenue officer, UK, who said: "Our own survey of 2,000 UK consumers in June 2021 also indicates a large pool of pent-up savings – to the tune of almost £200bn – with the majority of those surveyed planning to splash the cash as restrictions lift.
"Consumers are already gearing up for Black Friday, with 82% expecting to be more or similarly engaged than in the past, representing a significant opportunity for brands and agencies."
However, other marketers surveyed by the IPA were more tentative, worried that behaviour might not return to pre-Covid levels, and they were therefore unsure how to best position their businesses.
Paul Bainsfair, the IPA's director general, said: "These positive results mark the end of five quarters of continuous cuts. For revisions to UK marketing budgets to bounce back so quickly and strongly, following their nadir at the height of Covid-19 restrictions in Q2 2020, is very welcome news and corroborates our Bellwether prediction for a V-shaped recovery.
"As the vaccination rollout continues at pace and UK plc gears itself up for growth, we encourage companies to ramp up their advertising to make the most of post-lockdown, pent-up consumer demand."
Reflecting on the report's findings, Chris Daly, chief execuive of the Chartered Institute of Marketing, said that it was a "relief to see marketing budgets bouncing back".
He added: "After an opening quarter and a previous financial year of declining growth in marketing spend, today's positive IPA Bellwether report reinforces what we already knew about the industry – that marketing professionals are resilient, have up-skilled and adapted over the last year, putting the industry in a better position to show its value to businesses."