Marketing budgets grew by 11.8% in the first three months of 2015, up from 6.1% in the final quarter of 2014, the tenth successive quarter of growth. However, budgets are still growing at a slower pace than early 2014, down from 12.6% in Q3.
More than a third (37.8%) of companies have also grown more optimistic compared to 30.7% in Q4, though this number is still down from 38.6% in 2014, suggesting that political uncertainty is still breeding less economic confidence.
The last Bellwether report, released in January, showed that while marketing budgets had increased for nine successive quarters with average growth rates reaching record levels, they were still growing at a slower rate.
Internet, events and direct marketing see highest growth rates
The largest growth in the quarter was seen in Internet, particularly search and SEO. Internet spend was up by 8.4%, marking its 23rd successive quarter of growth. However, the rate had slowed to the lowest pace in over two years, down from 15.1% in Q4, with search down from 15.7%.
Events and direct marketing also saw growth of 5.7% and 5.5% respectively, the best growth of DM since the third quarter of 2010, while main media (TV, cinema and press) ad budgets were up for a fifth consecutive quarter (2.9%) but down from the final quarter of 2014 (6.7%).
Sales promotions also recorded growth, while PR, market research and other marketing recorded drops in spend.
Growth to extend into 2015 as marketers’ confidence improves
The report predicts a 4.2% rise in UK ad spend for 2015 with 28% of survey respondents forecasting an increase in their budgets relative to the 2014/15 financial year, adjusted down slightly from 30% last quarter.
Events and main media are set to benefit most as companies cite plans to maintain spending in TV, cinema and press campaigns as well as online marketing.
While ad spend is due to cool to 3.6% in 2016, marketers are increasingly optimistic about the financial prospects of their companies and the industry in general, despite the uncertain outcome of the upcoming election in May.
“While many commentators await to see what form Britain’s post-election economic landscape takes, marketing executives seems to be shrugging off any uncertainty,” said Paul Smith, senior economist at Markit and author of the Bellwether Report.
“Indeed, latest data shows companies planning to bolster their marketing budgets for the forthcoming accounting period to the greatest degree in eight years.”
2014/15 was the best budget year for marketing spend in a decade, according to the report, with 21.8% of companies indicating their budgets rose over the year.