Marketer confidence is back, and the budgets can’t be far behind

Both the IPA Bellwether and AA/Warc Advertising Expenditure reports – while lagging behind the current marketing landscape by a few months – present an upbeat snapshot of marketer confidence, suggesting possible forthcoming releasing of the purse-strings.

Other indicators, such as the GfK consumer confidence in the economy barometer, look healthy. The GfK data for July, reporting for the first time since the new Labour government took office, shows overall confidence up by a percent – at its highest level since September 2021. Closer to home, the quarterly Bellwether report, covering Q2, reported marketing budgets enjoying their strongest upward revision for more than a decade.

What’s hot?

The net balance of UK businesses expanding their total marketing budgets has been in positive territory for each of the past 13 quarters, making for a sustained period of growth in UK marketing spend. The AA/WARC Expenditure Report, which covers Q1 January – March, shows UK ad spend jumped by a forecast-beating 9.3% to £9.2bn in the first quarter. The data highlights the Q1 successes of search, which is up 12% for Q1 year-on-year (YoY); online display, which is up 12.8%; Out of Home (OOH), which is up 16.4%; and cinema, radio and TV, also all in positive territory.

Bellwether puts the spotlight on events, direct marketing and ‘main media’ as the strong budget magnets in Q2. Main Media bounced back to growth reduction in a quarter which saw build up to both the general election and Euro 2024 after Q1’s marginal downturn.

Looking ahead, AA/WARC forecasts that the UK advertising market will grow by 7.7% to reach £39.4bn this year, an upgrade from its April prediction. This is thanks to strong digital results and increased investment around Euro 2024.

Agencies particularly need to track which sectors are showing growth, so that they know where to focus their new business and marketing efforts. According to AA/WARC the big ad spenders for Q1 were the consumables sector, with 16.1% growth in Q1 (including food & drink, cosmetics and household FMCG), and services (including leisure & entertainment, media and transport), which registered a rise of 8.9%.

We can add some recent insight with data from Adbeat, showing big jumps in marketing spend for Q2 over Q1 for leading brands in retail, supermarkets, food and drink, and travel and entertainment (especially streamers).

Time to celebrate?

If the optimism isn’t yet borne out by increased pitch activity and budget spend across the board, it’s because companies are still cautious after the upheavals of the past few years, and the cost-of-living crisis is still hurting consumers. Plus, maybe businesses are holding fire until their own new financial year begins.

Steve McHenry, managing director UK at Yahoo, echoes the positive sentiments but acknowledges the fragility of the recovery and says: “It might be too soon to say that we’ve turned the corner just yet, but it certainly seems that confidence is back to a much better place than it has been over the past few years. We still need to be cautious, but any positive sign of growth should certainly be celebrated.”

As ever, there is truth in the phrase ‘you make your own luck’. If good times are just around the corner, then the agencies that prepare will reap the benefits. As Jody Osman, chief growth officer at Propeller Group, says: “It’s encouraging to see a more positive outlook than it has felt of late, but it remains a challenging and very competitive landscape. Therefore you need to make sure your proposition is differentiated, marketing is visible and new business activity is highly focused.”

We hope the renewal of business confidence continues as inflation stays low and the new government focuses on taking actions that grow the economy and there is more marketing investment as the all-important Q4 swings into view.

Finally, a confidence bellwether of a different type is the value placed on the company behind industry flagship event the Cannes Lions Festival of Creativity. It looks like Ascential is set to be acquired by conference giant Informa for a staggering £1.2bn. If this deal goes through, Informa will certainly want to further invest in one of its new crown jewels.