UK marketing budgets have grown for the first time since the outbreak of Covid-19, marking the first signs of recovery for the country’s battered advertising industry.
Between April and June this year total ad budgets expanded for the first time since the last three months of 2019 and to the sharpest extent since the first quarter of 2019.
Optimism about financial prospects within the industry also remains high as companies gear up for a strong post-pandemic rebound.
A net balance of +6.0 per cent of companies expanded their marketing budgets in the second quarter, according to the latest IPA bellwether report.
This is a sharp improvement on the net balance of -11.5 per cent of firms that recorded spending cuts in the previous three-month period.
Companies surveyed cited the rapid vaccine rollout and easing of lockdown restrictions as the main driver of confidence in an economic recovery.
Many firms are also expecting a surge in sales as consumers unleash demand that has built up during the pandemic.
However, some remained cautious about the impact of new strains of the virus, as well as potential long-term shifts in consumer behaviour as a result of the crisis.
“These positive results mark the end of five quarters of continuous cuts,” said IPA director general Paul Bainsfair.
“For revisions to UK marketing budgets to bounce back so quickly and strongly, following their nadir at the height of Covid-19 restrictions in the second quarter 2020, is very welcome news and corroborates our Bellwether prediction for a V-shaped recovery.”
Broken down by category, public relations recorded the biggest uptick in budgets, with a net balance of +1.8 per cent of firms increasing their spend in this area.
The key segment of main media also recorded higher budgets, with strong growth in video, audio and online advertising.
Published brands and out-of-home advertising saw budgets downwardly revised, but the cuts were narrower than in the previous quarter.
Events remain the hardest hit sub-sector by the pandemic with a net balance of -24.7 per cent of firms recording cuts.
The survey showed continued optimism among marketing bosses, while forecasts for ad spend in the next two years were lifted thanks to the continued success of the vaccine rollout.
The IPA now expects UK ad spend to grow 7.5 per cent this year and a further six per cent in 2022.
Chris Daly, chief executive of the Chartered Institute of Marketing, said it was a “relief to see marketing budgets bouncing back with the lifting of lockdown”.
“After an opening quarter and a previous financial year of declining growth in marketing spend, today’s positive IPA Bellwether report reinforces what we already knew about the industry – that marketing professionals are resilient, have upskilled and adapted over the last year, putting the industry in a better position to show its value to businesses.”