Total marketing budgets in the UK are facing their biggest drop since the 2008 global financial crisis according to the IPA Bellwether report released today, as advertisers trim their budgets due to the coronavirus pandemic. A net balance of 6.1 percent of those surveyed by IHS Markit (which conducted the survey) said their total marketing budgets have been revised downward, but video budgets are continuing to rise, with a net balance of 2.1 percent increasing their video budgets. But while marketers and advertisers are seeing their budgets immediately impacted, many expect the UK economy to quickly rebound, and for budgets to accordingly be revised upwards. For the 2020/21 financial year, a net balance of 16.2 percent of marketers expect total budgets to be revised upwards.
The IPA’s Bellwether report maps changes in marketing and advertising budgets by looking at the net balance of companies which are revising budgets upwards – the percentage of companies which say budgets have increased, minus the percentage of companies which say budgets have decreased. The measure gives an overall measure of how marketing and advertising budgets are changing, taking into account that in any given period some will be revised upwards and others downwards, with different sectors facing different circumstances.
Using this measure, the IPA finds that a net balance of 6.1 percent of those surveyed have seen total marketing budgets revised downwards compared to the previous quarter. For main media advertising specifically (which include TV and online video, digital, audio and outdoor advertising), a net balance of 9.9 percent have revised their budgets downwards.
But not all elements of main media advertising are seeing their budgets reduced. Video (which includes TV, online video and cinema) actually saw a net balance of 2.1 percent of respondents increasing their budgets. It can be reasonably be assumed that TV and video are performing better than that figure suggests, since budgets for cinema campaigns would have seen a large reduction, given the closure of cinemas.
Unsurprisingly, outdoor advertising has been the worst hit element, with a net balance of 10.9 percent saying they have decreased their budgets.
The overall picture painted by the reported is undoubtedly negative, but perhaps not as bad as it could have been, with video and other online digital advertising seen net gains. But Paul Bainsfair, director general of the IPA, warned that the results will not yet have captured the full impact of the pandemic, given that some respondents to the survey would have given their answers before the UK government announced the national lockdown.
“The Q1 results already reveal a sobering snapshot of the initial impact of COVID-19 on UK businesses’ marketing decisions despite fieldwork for this quarter’s Bellwether Report closing just a few days after Government enacted the lockdown,” said Bainsfair. “These are undoubtedly the toughest overall trading times that any business and indeed any marketer will have ever experienced, but while we suspect the fuller, sharper extent of this global pandemic to be captured in Q2 data, the hope from this report is that we will see a more upbeat end to the year.”
Paul Rowlinson, managing director of GroupM Digital UK, said the results showed that the picture isn’t completely bleak. “The COVID-19 crisis has severely impacted many clients’ businesses and naturally in many cases advertising has been stopped or significantly reduced,” he said. “There is still a significant proportion of clients who are able and want to advertise though, and for these clients there are many opportunities, especially in digital video (in particular entertainment apps), digital audio (including podcasts) and gaming apps which have all seen consumption soar during lockdown.”
And looking at marketers’ expectations for future budgets, it seems many expect a quick rebound once the lockdown is over. The report finds a net balance of 16.2 percent of marketers expect total budgets for the 2020/21 financial year to increase. And for main media advertising specifically, a net balance of 8.4 percent expect budgets to be revised upward.
Charlie Johnson, VP of UK and Ireland at Digital Element, said that the strong expectations for a quick recovery after the pandemic are encouraging. “Business leaders are realising how adaptable their employees are in this new era of remote working and embracing the contact-free means to develop business, moving seamlessly to digital and virtual events, as an example,” she said. “As the industry evolves through this uncertain time and begins to prepare for a positive future, the ability of both teams and the tools they use day-to-day to adapt to changing business needs will continue to be paramount to success.”