Marketers told to ‘hold their nerve’
The latest IPA Bellwether survey shows the coronavirus pandemic has caused broad-based cuts to all forms of marketing activity, but this is a “high risk strategy” and marketers are being urged to think twice before pulling spend.
UK marketing budgets have experienced their biggest reduction since the 2009 global financial crisis as emergency measures to stem the spread of Covid-19 puts a sudden halt to consumer and business spending.
Data from the IPA Bellwether Report for the first quarter of 2020, which was compiled between 2 and 27 March, shows a net balance of -6.1% of companies revised their total marketing budgets lower.
This is a notable swing from the final quarter of 2019, where the net balance stood at 4%. In March, 25% of panel members recorded a budget cut and 18.9% signalled growth.
Market research was the worst-performing category of the survey in the first quarter with a net balance of 21% revising their budgets down, followed by events (-15.9%) and public relations (-14.3%).
None of the broad slices of total marketing budgets saw growth, with direct marketing and sales promotions observing the slowest reductions at -6.6% and -7.2% respectively. The key brand-building category, main media, recorded its strongest downward revision since 2009, with a net balance of 9.9% saying budgets are being reduced.
Brands that hold their nerve will gain extra share of voice which will achieve competitive gains.
Bellwether respondents are more optimistic about their 2020/21 financial year budget plans, however, which shows expectations for a sharp rise in total marketing budgets over the coming year.
A net balance of +16.2% of firms anticipate higher spending allocations over the next 12 months, suggesting many companies plan to grow their businesses and brands. A number of companies also expressed a determination to tackle the current challenging economic climate, which they expect to be short-lived.
Encouragingly, the crucial main media advertising segment recorded the strongest forecasts, with a net balance of 8.4% of companies expecting upward budget revisions. Events marketing budgets are also set to see growth (net balance of 6.3%) once public health restrictions are relaxed. Modest upward revisions to direct marketing budgets are forecast (net balance of 3.7%), while the outlook for public relations was narrowly positive (net balance of 0.6%).