UK marketing budgets’ growth drops
The UK marketing budget has witnessed the slowest growth in two years in the first quarter of 2018 with Internet marketing budgets growing at the lowest rate since 2015 while main media advertising slipped into negative territory for only the second time in five years.
According to Ellen Hammett, Marketing Week reporter, this development is consequent upon ongoing reports of challenging marketing conditions and financial pressures – specifically around Brexit and GDPR.
Quoting the new Bellwether report from the IPA, Hammett reported that “22.9% of companies increased their marketing budgets compared to 17.9% that recorded a fall – resulting in a net balance of +5% and down from +8.6% in the previous quarter.
“Internet marketing remained the best-performing category, with budgets for the category up for the 35th consecutive quarter; however, it was at the lowest rate recorded since the end of 2015 at a net balance of +8.7%.
“Within the digital category, search/SEO growth also slowed down with the net balance falling from +12.4% in Q4 2017 to +5.6%, while mobile advertising growth became entirely stagnant, declining from +6% in Q4 2017 to 0%.
Meanwhile, main media advertising – which includes big-ticket campaigns related to TV, radio and cinema – slipped into negative territory for only the second time in five years, with the net balance falling from +1.7% at the end of 2017 to -2.1%.
Director at IHS Markit and author of the Bellwether Report, Dr Paul Smith, says the continued slowdown comes as little surprise, as costs and the uncertainty around the UK economy in a post Brexit world have “led to caution and belt-tightening across a number of sectors, especially those more exposed to retail and consumption.”
However, despite losing momentum since last summer, Smith says the positive news is that growth is being sustained – “meaning the longest bull-run in the survey history continues. But whether this can carry on “remains to be seen”.
“Although the latest survey shows anticipated growth in 2018/19, the degree of optimism is the lowest in five years.”
meanwhile a number of marketers see opportunities from Brexit in terms of trade and exports, particularly in fast-growing emerging markets, others are less upbeat about the impact of the UK’s departure from the European Union on their business.
Uncertainty over the actual outcome of the negotiations remained a dominant theme in the report, with some concerned that this is leading to belt-tightening among clients and undermining spending. Others are also worried about labour recruitment, especially after the UK leaves the EU.
However, with the implementation of GDPR in May, there were a number of mentions from panellists that this could impact on business performance in the next year.
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