Increasing optimism, however, has yet to be matched by an equivalent uplift in marketing budgets, which rose modestly in the three months to 31 March, the latest IPA Bellwether survey found.
About 38% of the 300 senior marketers polled reported they were more upbeat about the prospects for their own company than they had been at the end of 2011, double the number more pessimistic (see chart 1 below).
The percentage of those reporting greater optimism about the outlook for the industry they operate in increased to 26% during the first quarter, up from 10% in the final three months of 2011.
Hopes have risen that the UK economy is improving in the wake of more positive news stories this year. Bank of England governor Mervyn King has said that the UK economy would avoid a double-dip recession but growth would remain sluggish.
The willingness to increase marketing spend is lagging behind confidence levels, however. Almost 22% of companies reported marketing budgets had been set higher in the first quarter, offset by 21% that reported a downward revision (see chart 2 below).
Growth in spend on digital marketing drove increasing budgets. Investment in display, banner and social media grew 7.8%, while search spend rose 4.7% in the period. Main media budgets – television, press and radio – fell 2.7%, while direct marketing dropped 3.2% (see chart 3 below).
Looking forward, of the quarter setting new budgets for 2012, 31% set them higher than was actually spent in 2011 against 24% reporting a decline. The net balance, however, was the smallest uplift in three years.
Chris Williamson, chief economist at Markit and author of the Bellwether report, says marketers remained “cautious” in the first quarter.
“It’s perhaps a more pragmatic approach to budget setting, given that initial increases in budgets were steadily revised away in the past two years, as weaker than expected sales caused firms to cut marketing costs. However, with the coming year seeing events such as the Olympics, Diamond Jubilee and Euro 2012, it is likely that the year will again see an increase in marketing spend.”