Marketing budgets drop for first time in seven years
Marketing budgets have reduced 0.5%, according to the latest Bellwether survey, released 17 October. Events marketing budgets have taken a large hit, and have been downwardly revised for the first time since Q3 2018 (-5.9% from +4.8%).
Respondents noted a ‘downward revision’ in Q3, which they attributed to “heightened economic and political uncertainty”. It is the first-time marketing budgets have reduced in seven years.
However, marketing executives have observed cuts to their allocated spending, the net balance was broadly unchanged from the prior quarter (+0.0%) and slightly below neutrality. Hesitancy has dominated UK business decision-making.
More than 64% of respondents reported no change to their overall marketing budgets in Q3. There were reports that economic and Brexit-related uncertainty warranted a ‘wait-and-see’ approach. Low consumer confidence was said to have generated hesitancy towards spending, leading firms to hold back on big-ticket marketing drives and reduced willingness to spend.
Others indicated that, in the interest of cost efficiency, they had re-allocated budgets to online and social media-based campaigns, keeping total budgets unchanged in the process. Approximately 18.2% of firms cut total advertising expenditure, while 17.7% reported budget growth.
The shift towards digital marketing was again highlighted as the internet category remained the top performer. A net balance of +11.1% of firms observed budget growth here (+11.5% previously). The development of new online tools encouraged firms to boost internet budgets available to marketing executives. Data-driven campaigns and a greater push towards social media advertising also underpinned the continued rotation into the digital space.
Main media advertising budgets were placed on hold during Q3 (+0.0%) following upward revisions in the first two quarters of 2019 (+5.2% and +5.6% respectively), signalling a reluctance among firms to commit to big-ticket marketing campaigns. The remaining types of marketing all recorded in contraction territory, with the worst performer being market research (-16.9% from -2.9%).
Elsewhere, direct marketing spending was reduced (-7.0% from -9.0%), as has been the case since Q4 2017, and continued declines were also seen for sales promotions budgets (-2.3% from -7.1%), PR budgets (-4.7% from -5.2%). Meanwhile, ‘other’ marketing expenditure, which captures anything not already included, also contracted (-13.9% from -12.8%).