Strong advertising growth forecasted for 2022
Marketing budgets for Q3 in the UK increased at the strongest rate since Q2 2017, according advertising industry organization IPA Bellwether Report. However, the growth was lower than expected in an earlier forecast. The report anticipates strong adspend growth of 6.6% and 6.2% in 2021 and 2022 respectively to accompany the strong economic expansion.
Adspend is expected to normalise from 2023 onwards. The forecasts for 2023, 2024 and 2025 is 2.4%, 1.7% and 2.9% respectively.
Total marketing expenditure in Q3 grew at the fastest pace since the second quarter of 2017, as a net balance of +12.8% of firms registered upward budget revisions in Q3 2021, from +6.0% in Q2. Although upward revisions to total marketing budgets were strong, they still fell short of the growth firms initially had predicted for the 2021/22 financial year, where a net balance of +17.4% of firms anticipated expansion.
UNCERTAINTIES
Approximately one-in-four recorded higher spending (25.6%), compared with 12.8% that observed budget cuts. The latest data marked the first time in three years that successive quarters of growth in overall marketing spend has been registered, IPI Bellwether said.
”Some surveyed companies were wary of lingering uncertainties, particularly around the trajectory of virus cases as we head into the winter period. Ongoing supply chain disruptions, which some firms mentioned had impacted their ability to carry out marketing campaigns, were also cited as a downside risk”, the report said.
BEST PERFORMING
Main media advertising was the best-performing marketing category in the third quarter, with a net balance of +8.6% of firms recording upward budget revisions (from +1.3%), as more firms upped their spending on ‘big-ticket’ campaigns.
Within main media, video (+12.6%, from +4.2%) was the main driver, followed by other online (+10.6%, from +11.0%) and audio (+6.0%, from +1.1%). Published brands returned to growth (+5.2%, from -6.1%), although out of home fell again (-2.0%, from -7.5%).
The remaining marketing categories were split between growth and contraction. Direct marketing was the next best performer, improving on the previous quarter (net balance of +5.6%, from +0.7%).
OPTIMISM
”There was a further increase in optimism among Bellwether panelists during the third quarter, with improved expectations for growth at both a company-specific and industry-wide level.”
A net balance of +37.5% of firms (versus +34.6% previously) were more optimistic about the financial prospects for their own company, which was the most bullish Bellwether panelists had been about their businesses since the first quarter of 2015. Around 48% of firms expect stronger growth than they did three months ago, compared to just 11% who were less optimistic.
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