The Brexit uncertainty and its impact on the economy have forced companies to pull back on the marketing expenditure, shifting money into digital hoping for cost efficiencies.
UK companies cut their marketing budgets during their third quarter, observing decrease first time in seven years, amid heightened economic and political uncertainty.
The IPA’s quarterly Bellwether report indicates that 0.5% of marketers questioned revising their marketing budget down in the upcoming third quarter. Nearly 64.1% of respondents reported no change in budget, adopting the ‘wait-and-see’ approach in the face of uncertainty about Brexit and its predicted impact on existing business.
Companies are also unsure about low consumer confidence, causing them to hold back on the expenditure, particularly for the big-ticket marketing drives. Overall, 18.2% of firms cut ad expenditure, while 17.7% reported budget growth.
Only digital marketing reported an increase in their budget, with a net balance of 11.1% of firms reporting a boost in the expenditure by new online tools, data, and a push towards social media. Search also reported the growth of 6.1%, although this was down from 9.9%.
IPA predicts a modest 1.1% increase in annual ad spend but expects it to tick up in 2020 with the growth rate of 1.8%, followed by 2% in 2021, 2.2% in 2022, and 3.1% in 2023.