The latest Bellwether report, a quarterly survey of 300 senior marketers from the UK’s top companies and a respected barometer of confidence in the industry, found more than a quarter (25.6%) had revised budgets up against what was planned at the beginning of 2014 compared to 13% setting them lower. The net balance, 12.6% was the third highest since the IPA began publishing the report in 2000.
Confidence in the economy
The increase in marketing budgets stemmed from the growing confidence respondents had in their own company’s prospects. A net balance of 38.6% said they had grown more optimistic, up from 37.5% in the second quarter.
Confidence levels had been inflated by a steady flow of good economic news. The Office of National Statistics said last month that the UK economy is growing faster than previously thought, while it was announced this week that unemployment has fallen below 2 million for the first time in almost six years.
Headwinds could cut growth
However, despite some positive macro-economic indicators, concerns remain elsewhere. Consumer confidence continues to be fragile as wage continues to lag price inflation while businesses continue to fear the likely increase in interest rates that would increase the cost of borrowing and act as an incentive for consumers to save and not spend.
The spectre of German economic decline and the likely domino affect on the rest of the Eurozone and the UK also looms large.
This in mind, Bellwether forecasted marketing spend would be 3.8% in 2015, almost half of the 7% tipped for this year.
Sir Martin Sorrell, chief executive of WPP, issued a rallying call to marketers this week when he told attendees at IAB Engage not to be bowed by such macro-economic challenges and the impact of geo political crises in Ukraine and Syria and invest in marketing to drive growth.
Despite the more sobering view on 2015 growth, Bellwether still paints the picture of a bullish industry particularly compared to the post financial crash period between 2009 and 2012 when cautious finance directors put a stop on their marketing colleague’s spending.
“At this rate, 2014 is panning out to be the best year for growth of marketing spend in the survey’s 15-year history.”
Chris Williamson, chief economist at Markit and author of the Bellwether report, says: “Companies remain bullish about the business outlook, ratcheting up their marketing spend once again and adding to prospects of the economy continuing to grow strongly as we head towards the end of the year.
“The third quarter upward revision to marketing budgets was the third largest recorded since the survey began in 2000, exceeded only by the upward revisions already seen in the first two quarters of the year.
“This represents a remarkably positive picture of companies gaining confidence about the economic outlook as the year has proceeded, ploughing more money into budgets that had already been set higher at the start of the year. At this rate, 2014 is panning out to be the best year for growth of marketing spend in the survey’s 15-year history.”