Events budgets defy downward trend in second quarter, IPA finds
Events budgets defied the trend for total marketing budgets during the second quarter of 2019, registering solid growth and extending the upturn which has been recorded in recent quarters, according to the Q2 2019 IPA Bellwether Report.
The upturn in events budgets comes against a backdrop of flatlining marketing budgets overall, as firms reported no change to available expenditure amid growing political and economic uncertainty.
The net balance of marketing executives recording growth in events budgets increased to 4.8 per cent in the second quarter, from 3.4 per cent previously, signalling a stronger gain in available advertising spend. Aside from main media and internet marketing, events was the only other Bellwether category to expand during Q2.
Forecasts made previously for the 2019/20 financial period were upbeat, corroborating with the latest data. A net balance of 2.5 per cent anticipates events budgets to rise over the coming budget-setting year.
However, the bigger picture for marketing budgets is less positive as the latest Bellwether data signals a stalling of growth, with the net balance falling from 8.7 per cent to 0 per cent. The 20 per cent of panel members reporting greater marketing spend was completely offset by those cutting expenditure, while the remaining 60 per cent kept budgets unchanged since Q1.
Growing economic uncertainty, continued ambiguity over Brexit and additional risk through a change of political leadership in the UK were mentioned by firms as factors expected to challenge the business environment over the coming year. This created hesitancy among clients and delayed decision making. Panel members also raised concerns that difficult conditions domestically were damaging consumer confidence and impacting consumption. Businesses were also wary of headwinds from external sources, particularly spillover effects into UK markets from global trade disputes and weaker growth at key export destinations such as Europe and Asia.
Paul Bainsfair, IPA director general, said: “Between Boris, Jeremy and Brexit, coupled with a dip in consumer confidence, it is perhaps no wonder that this quarter’s Bellwether shows zero growth to overall UK marketing budgets. Until a clearer political and economic path is outlined, the vast majority of companies are locked in stasis. It is reassuring to see, however, that some companies are revising up their investment in main media advertising; this is where they will build the longer term growth of their brands, which is crucial to weathering these tougher times.”
Joe Hayes, economist at IHS Markit and author of the Bellwether Report, added: “The expansion in marketing budgets during the first quarter proved short-lived, but developments in the wider economy during Q2 have shown that more intense challenges lie on the horizon for UK businesses. Firms have subsequently adjusted to this, belt-tightening in some cases and withdrawing into a wait-and-see approach once again. Given the economic and political uncertainties that remain at large, a neutral stance towards budget setting appears fully justified.
“That said, internet marketing remained a bright spot. We see continued growth in the digital space, with panellists pointing to ongoing drives through technological improvements and social media channels. Firms also kept boosting main media marketing spend, with brand recognition and building initiatives ongoing.”
Published Date: 17/07/2019