Confidence across the industry remained high in the second quarter of 2014, according to the latest IPA Bellwether report, as marketers focused on prioritising brand awareness and protecting market share in order exploit the improved sales environment.
The study, a quarterly survey of 300 senior marketers from the UK’s top companies and a respected barometer of confidence in the industry, found a net balance of 15.2 per cent of companies increased their budgets in the second quarter, which, while noticeably down on the previous period’s 20.4 per cent, is the second highest shift in the survey’s history.
The bullish belief in the discipline stems from more than a third of companies (37.5 per cent) indicating growing confidence in their own financial forecasts, while that for wider industry prospects was at 33 per cent. Although these are the lowest readings for a year, they both remain at historically elevated levels, according to the report.
The economic buoyancy led to 28.3 per cent of respondents reporting an increase in their overall marketing budgets in the period, compared to just 13.1 per cent that revealed a drop. It reflects a shift toward marketers employing a more potent blend of cost effective and high profile marketing tactics to lift sales, researchers found, as well as the growing importance of online content.
Internet spend is set to be increased by 14.7 per cent – more than any other Bellwether category – with brands citing improved targeting and cost-effective techniques as key to their decisions. Investment in main media advertising, spanning as TV, radio and cinema, was also revised up to 11.5 per cent, a slight upturn on the previous quarter.
Paul Bainsfair, director general of the IPA, says the findings are “upbeat”, both for marketing budgets and companies’ financial prospects. The IPA predicts a “strong real-term” 6.1 per cent increase in ad spend in 2014, up from the 4.7 per cent prediction in the previous period.
The hike in spend is in part based on the trade body’s prediction that the economy will expand this year, pushing brands to respond “positively” to the Bank of England’s guidance on lower interest rates. Additionally a slower 3.8 per cent increase in ad spend has been set for 2015.
Chris Williamson, chief economist at Markit and author of the Bellwether Report, says: “Marketing spend is surging higher as companies remain upbeat about the future. The extent to which business confidence has shown continual improvements over the past year is remarkable, generating a major inflow of investment in marketing.
“Companies reported that spending on marketing and advertising activities showed the strongest rise for a decade last year. This year’s budgeted spend, which was already set higher than last year, has been revised up again in the second quarter, setting the scene for a bumper year.”
Research published last month (1 June) showing companies plan to expand their marketing teams with young talent also reflects the trend of increased confidence returning to the advertising industry.