The report, which has been conducted on a quarterly basis since Q1 2000, revealed a net balance* of +6.1% of companies registering an increase in budgets during Q4 2014, down from +12.6% in Q3 2014 and its lowest since Q1 2013. (*The net balance is calculated by subtracting the percentage reporting a downward revision from the percentage reporting an upward revision.)
Supporting the overall increase in marketing budgets, optimism regarding companies’ future financial prospects has improved. A net balance of +30.7% of companies indicated they had grown more optimistic compared to three months ago, although this is down from +38.6% in Q3 2014. Confidence regarding wider industry financial industry prospects also remained positive at +16.2%, although down from +30.4% in Q3, marking the lowest level for six quarters.
In terms of actual spend, plans for the 2015/16 budget year have been set to their highest levels in eight years. A net balance of +30.6% of companies are anticipating a rise in their marketing budgets, relative to 2014/15 levels. Events, PR and main media are expected to benefit most from this uplift in total budgets.
Regarding growth in UK adspend, the Bellwether’s forecasting model predicts a rise of 4.1% in 2015, in line with a stronger than previously expected increase in consumer spending.
All categories recorded upwards revisions to their marketing budgets in Q4 2014, with the exception of ‘other’ (-10.5%).
The highest upward revisions were made to internet with a net balance of +15.1%. This was up from +14.5% in Q3 and marks the highest reading since Q2 2013. Within internet, search also recorded a significant net balance increase of +15.7%, up from+9.4% in Q3 2014, marking 22 consecutive quarters of growth. Main media advertising also recorded growth, +6.7%, although this was down from +9.2% in Q3, marking a one-year low.
Additional categories to record growth include: PR (+6.6%); direct marketing (+3.9%); events (+2.4%); sales promotion (+2.4%); and market research (+0.6%).
Paul Bainsfair, IPA Director General: “According to the latest Bellwether, 2014 was the best year for growth of marketing spend in the survey’s 15-year history and budgets have been revised up for a ninth successive quarter. This gives the industry real cause for celebration. While it is inevitable that the current wider economic uncertainty and geopolitical unrest is starting to impact decisions regarding marketing budgets, it will be interesting to see which companies will weather this best. In the long run, we know that maintaining share of voice drives brand growth and wins market share.”
Chris Williamson, Chief Economist at Markit and author of the Bellwether report: “The further upward revision to budgets at the end of last year rounds off what looks to have been the best year in terms of marketing expenditure growth in the history of the Bellwether report, and 2015 could be even better. The planned increase in marketing budgets for the coming year is more aggressive than anything we’ve seen since data were first collected back in 2000.
“However, it’s clear that business optimism has cooled. Given the upcoming General Election, the likelihood of interest rates starting to rise in 2015 and ongoing worries about the Eurozone, it’s not surprising that we are seeing companies report increased uncertainty about the year ahead. We’re therefore forecasting a further solid rise in marketing and advertising spend in 2015, but expect that 2014 will prove to have been the high-water mark in terms of growth in the current upturn.”
The Bellwether Report is researched and published by Markit Economics on behalf of the IPA. First published on the 17th July 2000, it features original data drawn from a panel of around 300 UK marketing professionals and provides a key indicator of the health of the economy. The eight-page 15 January 2015 edition is available to purchase here for £99+VAT (IPA members) and £140+VAT (non-members) as an immediately downloadable PDF. To sign up for an annual subscription, or to request historical data, contact firstname.lastname@example.org.
Here's what some experts from across sectors and around the UK think:
James Goddard Chief Executive JJ Marketing, “In the latest Bellwether Report it’s great to see Marketing executives signalling the greatest upward revision to Public Relations marketing budgets for nine quarters during Q4 2014 – the highest reading since data was first collected in Q4 2012 and also extending the current period of growth to exactly one year. This bodes extremely well for continued growth in Public Relations spend into 2015. Despite the uncertainties created by the upcoming General Election, the likelihood of interest rates starting to rise in 2015 and ongoing worries about the Eurozone these figures should send a very upbeat message to the wider economy.”
Josette James,Client Services Director, Wunderman and chair of the IPA Customer Experience Group, “There is a definite air of confidence from brands reflected in the increasing spend. However,Direct Marketing remains significantly behind other media types in growth terms. This is possibly due to companies wrestling with the potential opportunities and challenges that a more connected landscape offers direct and how to evolve their customer experience offering. Many brands have yet to really understand and harness the potential.”
Tom George, Chairman UK and Northern Europe EMEA, MEC and chair of the IPA Media Futures Group,“The UK media market remains buoyant. We think 2014 will deliver a year-on-year growth of 6% versus 2013 and are predicting a similar level of growth for 2015 which is consistent with the sentiments of marketers in the Bellwether report. Bellwether reveals that, for the fourth successive quarter, main media has registered an upward revision and, whilst there has been a slight dip in optimism in Q4, the UK is still the fastest-growing mature advertising economy.”
Pete Robins, Managing Partner, Agenda21 and chair of the IPA Digital Media Group, “Whilst the internet category has historically shown consistently high growth, the latest figures are continuing this trend, backing up the feeling that there are still a number of advertisers who are yet to take full advantage of internet based advertising. Access to better tech and analytics are allowing more advertisers to unpick the detail around their investments shining a light on business growth opportunities.
Denise Turner,Managing Partner, Chief Insight Officer, Havas Media, "Market research is a vital tool in the marketing director's armoury, giving them the confidence to make those big decisions about increased marketing investment. As such the investment in market research often comes before the increase in investment. We are seeing a sustained increase in advertising investment, no doubt as a result of previous investment in research. It is pleasing to see that investment in market research is remaining relatively steady over time with the majority of panellists (79%) leaving their market research budgets unchanged."
Paul Simonet,Creative Strategy Director, Imagination, “The fifth successive quarter of growth is encouraging and perhaps more encouraging is the continued recognition that events and experiences are a central part of integrated brand campaigns. From technology to tea more brands are realising that the experiences that they create and share are the real drivers of consumer attention and engagement.”
Around the UK:
Claire Wood IPA Chairman for Scotland, and Planning Director, Leith Agency, “I'm delighted to report that 2014 saw the highest growth in marketing expenditure recorded since the Bellwether report was first produced fifteen years ago. With confidence levels high, the planned increase in marketing budgets for 2015 is more pronounced again than anything we’ve seen in recent years.Interestingly, and reflecting the importance of digital activity to our agenda at the IPA in Scotland, digital (online advertising) continues to be the strongest performing category in the last quarter of 2014, reflecting a continued appreciation of the opportunity for targeted and measurable activity in this environment. The mood in the business community in Scotland is broadly optimistic. Bank of Scotland research charts ongoing economic growth in December last year with further growth predicted for the first six month of this year. Amidst some uncertainty about oil prices, the export market for Scotland and the forthcoming election, the outlook isn't universally rosy but we're optimistic that conditions will be less tough for businesses across the country than we've seen in recent years.”
Stephen Roycroft, IPA Northern Ireland Chairman and Managing Director, RLA Ireland, “Obviously IPA members welcome the continued growth in Clients’ marketing budgets; however it is important to note that effective marketing is proven as an investment not a cost, and that the return on investment be promoted at every level in the organisation.”
Ben Quigley IPA Chairman England & Wales and Group Chief Executive, Everything Different, “The latest Bellwether shows that marketing budget growth is continuing from a record 2014 into a very upbeat 2015, around the UK. Growth has not only been sustained for nine consecutive quarters, but also appears to be sustainable, which is good news all-round.”
Andrew Wilson, IPA Birmingham City Head, WAA, “It’s deeply heartening to read the 2014 Q4 Bellwether report. Budgets having increased for nine consecutive quarters and the average growth rate for 2014 is the highest recorded in the survey’s 15-year history. It’s no surprise that there is so much optimism for 2015/16 and that Bellwether predicts a 4.1% rise in UK adspend this year. While I accept there is a certain degree of uncertainty when considering potential factors like an inconclusive General Election, as well as potential interest rate rises, I believe the industry, especially here in the Midlands, is well-placed to go from strength to strength. It will be challenging, but I believe we have the skills and talent to be positive about 2015. It’s going to be exciting year.”
Last updated 15/01/2015