Wednesday 17 July 2019 12:01 am

UK marketing budgets stall as political uncertainty hits brands

UK marketing budgets flatlined in the second quarter, as growing uncertainty reversed a surprise ad spend boost at the start of the year.

Figures released by the Institute of Practitioners in Advertising (IPA) revealed marketing budget growth stalled in the three months to the end of June, with businesses adopting a more cautious approach to advertising.

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The disappointing findings reverse a robust performance in the first quarter, when a net balance of 8.7 per cent of marketers reported an increased budget.

Firms blamed the stagnation on growing economic uncertainty and ongoing ambiguity over Brexit, worsened by a change of political leadership in the UK.

Marketers said these factors created hesitancy among clients, while uncertainty has also prompted fears of a decline in consumer confidence.

Internet advertising remained the most robust medium for marketers, with a net balance of 11.5 per cent of companies reporting an increased budget in this area.

Main media advertising budgets were also given a boost in the second quarter, as some business turned to big-ticket marketing campaigns to build brand recognition.

But these gains were offset by further declines in budgets for market research, PR, sales promotion and direct marketing, which posted its worst performance in more than 10 years.

“Between Boris, Jeremy and Brexit, coupled with a dip in consumer confidence, it is perhaps no wonder that this quarter’s report shows zero growth to overall UK marketing budgets,” said IPA director general Paul Bainsfair.

“It is reassuring to see, however, that some companies are revising up their investment in main media advertising; this is where they will build the longer term growth of their brands, which is crucial to weathering these tougher times.”

The report also revealed a negative attitude towards financial prospects in the second quarter, with 34 per cent of marketing executives offering a pessimistic view of finances in their industry.

Marketers were also negative towards the financial prospects of their own companies, reporting the highest degree of pessimism since the fourth quarter 2011.

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The IPA said it remains cautious about ad spend forecasts for the full-year, with budgets expected to tick up only a marginal 1.1 per cent.

However, the industry body said it expects more positive growth from 2020 onwards, as businesses take a more proactive approach to marketing once uncertainty clears.

Main image credit: Getty