Marketing budgets have experienced their strongest level of growth in almost a decade, according to the IPA’s latest ‘Bellwether’ report, suggesting a strong year ahead for UK marketing spend.
In a clear indication of an increasingly positive outlook, 26% of the 300 UK-based companies that took part in the IPA’s Q4 2023 research said their total marketing budgets had risen. This was more than twice the amount of firms who said that they were making cuts (11.3%).
The 14.7% growth seen across the board is up significantly on the 5.3% posted in Q3 2023, and marks the highest level of growth seen since Q2 of 2014. It also extends the current trend of total marketing budget expansion to its 11th consecutive quarter – the longest uninterrupted stretch of growth since 2018.
These developments suggest that although UK business has faced a seriously challenging period, many firms have taken a proactive approach to the market, instead of prioritising savings.
Marking a return to pre-Covid times, events was marketing’s best-performing sub-category for the final quarter of 2023, with spend jumping by an impressive 16% (up from Q3’s 6% increase). Also notable was the upturn in direct marketing, which – with 12.6% growth in value – saw its greatest upturn since 2005.
Highlighting the re-emergence of events, GroupM CEO, Josh Krichefski noted: “We predicted that live events would see a resurgence in popularity this year and these figures seem to support that.
“Its net upwards forecast of +15.1% shows that in the UK at least, companies are realising the value that immersing customers in unique experiences can have on forging lasting connections and loyalty. Whether brands continue this investment throughout 2024 remains to be seen but these figures paint an encouraging picture that the segment’s positive momentum will continue.”
Despite the overall positive news, the industry did see a slowing down across some budgetary increases – such as main media (which includes online, out of home, TV, cinema, audio and print), which grew by just 1.9%, compared to the 7.4% growth seen in Q3.
“It is reassuring to see marketing budgets are up, with direct marketing – one of the main drivers – seeing its greatest upturn since 2005. In the current climate, there is no room for a one-size-fits-all approach,” said RAPP UK and APAC executive chairman, Chris Freeland.
“And, as AI capabilities such as automation and personalisation emerge, those who fail to adapt and invest in such technologies to improve customer experience quickly will fall behind.”
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The slowdown in main media compared with its strong performance in Q3, where the category had been the top performer. For Q4 though, the bulk of main media growth was online, which increased by 13.2%, with 6.6% growth across video and 1.4% for print. Conversely, OOH spend was down by 8.1%, while audio spend dropped by 7%.
Offering up a markedly positive outlook for the future, the IPA expects overall marketing spend to grow by around 30% for 24-25, predicting a welcome 14.2% bounce-back for main media. Investment and spend in PR is expected to grow by 10.6%, direct marketing by 16.8% and events by 17.8%. Spending on sales promotions is also set to grow, by 8.2%.
Striking a cautionary tone was Kantar UK insights managing director, Dom Boyd, who said: “Businesses are kicking the new year off with a sense of optimism around their futures and there’s certainly plenty of opportunity to drive growth.
“But with news this week that inflation isn’t slowing as quickly as we’d hoped and the IPA showing that ad spend is expected to dip in real terms, we’re not out of the woods yet.
Criteo Northern Europe managing director, Nicole Kivel added: “Encouraging signs over the festive period and sales moments like Black Friday – which drove 12% more sales year-on-year – have buoyed marketers.
“With online advertising up 13% in Q4, attention will now be fixed on Google’s rollout of its Privacy Sandbox. Marketers and their media agencies will want to explore new, sustainable ways to reach buyers and access to closed, authenticated environments like retailers’ sites will be a crucial component.”
