Another quarter, another Bellwether from the IPA.
If you don’t have time to absorb all the facts, the condensed version is this:
Spending is still going up, but industry confidence in the future is shaky, despite many businesses being optimistic about their own prospects.
Like last quarter there were upward revisions to marketing budgets, but they’re less enthusiastic than in recent years and optimism about the industry’s financial prospects has dimmed.
Uncertainty around EU membership and financial rumblings around the globe are largely to blame, however the report still shows the 14th consecutive quarter of upward revision in marketing trends – the longest trend in the report’s history.
The report, which has been conducted every quarter since the beginning of the millennium, revealed a net balance of +3.0% of companies registering an increase to their budgets during Q1 2016, an increase on the same quarter last year.
The net balance is calculated by subtracting the percentage of negative answers from the percentage of positive answers.
And in some cases, the negative is the prominent talking point.
For example, -6.5 per cent of businesses are optimistic about the industry’s financial prospects.
This seems bleak, but in fact more businesses were confident about their own prospects, though that figure is still down from 20.4 per cent last year to 13.6 per cent this year.
There’s evidently a mismatch between what businesses feel about the industry and the evidence presented to them from their own dealings.
In this same vein, marketing execs are still upbeat about their own budgets for the coming accounting year, with +23.3% forecasting higher spend in 2016/17.
Because of this series of developments, Bellwether predicts adspend growth of 3.3 per cent for 2016, slightly down from the 3.9 per cent predicted in the Q4 2015 report.
Where is the change in spend happening?
It almost goes without saying at this point that internet marketing saw the biggest increase to spend, seeing a 9.8 per cent increase year-on-year, up from 6.9 per cent last quarter. This will be its 27th consecutive quarter of growth.
Events and main media also saw growth, but sales promotion, direction marketing and the old reliable “other” were the sectors with reduced spend.
Summing up, Paul Bainsfair, IPA Director General said
“It is good to see that marketing budgets have now been revised up continuously for three-and-a-half years, however, with confidence waning the outlook appears mixed.
“Following the referendum in June, the summer Bellwether should hopefully provide better clarity on where we are headed. On balance some growth seems the most likely outcome especially with the European football championships and Olympics set to provide a shot in the arm to budgets in the immediate months ahead.”