Omikron and inflation lowers UK ad growth forecast
Omikron´s negative impact on consumer confidence and parts of the economy, particularly hospitality and leisure, and inflation has lowered the 2022 annual UK advertising growth forecast to 5.2% from 6.2% in the IPA Bellwether Report saying it´s still a strong growth.
From 2023 onwards, Bellwether expects more modest rates of growth as momentum from the economic recovery peters out.
“We anticipate GDP growth to slow in 2023 and 2024 and forecast annual expansions of 1.8% and 0.9% respectively, in part reflecting the impact that rising tax burdens will have on consumption levels, as well as tightening interest rates.”
Adspend 2023 growth is forecast at 2.5% (vs. 2.4% previously), and 1.3%, 2.3% and 2.5% in 2024, 2025 and 2026 respectively.
“Omicron has heightened uncertainty, altered consumer behaviour and subsequently impacted UK companies’ marketing budget decision making. Going forward, new variants – alongside supply chain issues and heightened inflation – may indeed induce further wobbles”, said Paul Bainsfair, Director General, IPA
”The key for businesses to weather these fluctuations will be, where possible, to invest in the longer-term and in brand-building media. As the evidence proves, brands that continue to invest in their marketing throughout the toughest of times come out on top.”
”Another risk to businesses is rising cost burdens, which have been inflated by higher energy and transport prices, increasing wages and raw material shortages, and has inevitably led to some belt-tightening”, said Joe Hayes, Senior Economist at IHS Markit and author of the IPA Bellwether Report
”Regardless, firms are pressing ahead with their bullish spending plans as close to half (45.7%) of Bellwether panellists expect to increase marketing budgets in the coming year.”
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