Big-ticket advertising campaigns, including those on television and radio, are making a comeback as the UK’s economy continues to improve.
Marketing budgets have experienced their largest upward revision since the first quarter of 2014, according to the latest IPA Bellwether report released today.
After a minor dip in the first quarter, the total balance for main media budgets rose to 3.5 per cent in the second quarter, driven largely by growth in online and video advertising.
The data revealed a jump in the net balance of UK businesses expanding their total marketing budgets from 9.4 per cent in the first quarter of 2024 to 15.9 per cent in the second quarter. It marks the second highest upward revision in the survey’s near 25-year history.
Joe Hayes, principal economist at S&P Global Market Intelligence said that, as growth jumped to a ten-year high, it appears that UK companies in the survey have shrugged off the uncertainty of a general election.
“A strong performance by the UK economy so far this year, in tandem with falling inflation and the expectation of an imminent interest rate reduction by the Bank of England, has helped lift confidence, providing more fertile grounds for companies who wish to invest into their brands and position themselves for long-term growth,” he said.
Despite challenges with the UK economy such as high borrowing costs and living expenses, the economic forecast for 2024 has been revised upwards. S&P Global Market Intelligence has predicted 0.6 per cent annual GDP growth, north of the previous forecast.
But Dom Boyd, managing director of Insights at Kantar UK, warned the leap in promotional spending should set some alarm bells ringing. He said: “It’s a common tactic during major sports events like the men’s Euros, but brands should be careful not to get addicted to deals.
“While cutting prices can provide a short, sharp sales boost, it rarely delivers long-term profitability and growth. Marketers should protect their brands’ pricing power at all costs and use budgets to enhance, not chop away at it.
“With main media and events spend on the up, brands are clearly – and rightly – piggybacking on the attention and positivity surrounding sports tournaments,” Boyd added.