The latest Institute of Practitioners in Advertising (IPA) quarterly Bellwether Report, researched and published by Markit Economics for the institute, revealed that overall marketing spend grew for the 14th successive quarter in Q1 of this year.
Direct marketing budgets saw a 4.9% spending drop, while "main media", including newspapers and magazines, saw a 1.7% growth in Q1, compared with Q4 of last year.
Internet marketing saw the largest quarterly growth, from 6.9% in Q4 of 2015 to 9.8% in Q1 this year, the 27th quarter of expansion. Events also saw growth while spending on PR, sales promotion and ‘other’ activities fell.
Despite budget growth overall, the report revealed fears over the wider industry's financial prospects due to concerns about the macroeconomic climate.
IPA director general Paul Bainsfair said: “With confidence waning the outlook appears mixed. After the June referendum the summer figures should hopefully provide more clarity on where we're headed.
“Some growth seems the most likely outcome especially with the European football championships and Olympics set to provide a shot in the arm to budgets.”
The report revealed that while some companies increased budgets this quarter, confidence over financial prospects dropped to its lowest level since early 2013.
Optimism over companies’ own financial prospects also slumped to its lowest level for four years from 20.4% in Q4 2015 to 13.6% in Q1 2016.
In spite of the poor financial outlook, nearly a quarter of marketing executives forecast higher spend this year. Bellwether predicted ad-spend growth of 3.3% for 2016.
Report author and Markit senior economist Paul Smith said: “The latest survey leaves the impression marketing executives are currently living in a period of flux.
“Economic and financial prospects have taken somewhat of a nosedive, probably not helped by uncertainty around EU membership.
“And that’s led to those holding company purse strings to adopt ongoing prudence and caution when committing funds to areas such as marketing.
“While this inevitably has led to downward pressure on budgets, steady sales flows are encouraging new product development and enabling marketing executives to eke out modest growth in funds.”
Direct Marketing Association managing director Rachel Aldighieri also said that messages from the market could be mixed.
"The IPA Bellwether report suggests print volumes are declining but our research suggests that supplier print margins are actually increasing. While this forecast shows an increasing digital focus, print has established its place in the new digital world.
“We know campaigns that include a print component perform better than those campaigns that do not.
“New technologies, better targeting and the guarantee of delivery mean that print has the ability to cut through and have an impact when executed well.”
To buy a copy of The Bellwether Report, email economics@markit.com.
