Brands are increasing their marketing budgets, according to a study
Posted: Sun Jan 05, 2025 10:10 am
The proportion of companies increasing their marketing budgets has hit an eight-year high, with relaxed Covid-19 rules meaning marketers are more confident in their investments.
A net 14.1% of companies revised their marketing budgets upwards in the first quarter of 2022, according to the latest IPA Bellwether report. This figure is the highest since almost eight years ago, in the second quarter of 2014.
Marketing budgets have now seen growth for four consecutive quarters. However, the latest figure represents a significant increase from the previous quarter, when a net 6.1% revised their marketing spend upwards.
Nearly a quarter (24.1%) of surveyed companies increased their marketing spend in Q1 2022, compared to just 10.0% who revised their budgets downwards.
investment-marketing-2022
The increase in marketing spending reflects several countries emerging from the Covid-19 pandemic and means increased confidence among businesses that they will be able to continue without disruption from lockdowns or restrictions.
However, the IPA warns slovenia phone number list that the industry faces “increasingly strong headwinds” to its recovery, including inflation and the war in Ukraine.
Despite these significant challenges, companies are “very positive” about their budgets for the coming year. A net balance of 33.1% of the companies surveyed expected growth in their available marketing budgets for 2022/23.
Category Breakdown
Of the categories tracked by Bellwether, events saw the largest growth in marketing investment during the quarter . A net 18.7% of panellists reported increased spending in the channel, up from -3.9% in Q4 2021. The further easing of Covid measures “gave companies the confidence to plan larger-scale meetings with clients and set up exhibitions,” the report explains.
Advertising in mainstream media also saw “solid” budget expansion, with a net balance of 9.4% of companies reporting an increase in spending in this category compared to 3.1% in the previous quarter. Online advertising drove growth in this category with a balance of 18.6%, along with video, which grew to 9.0%, and published brands, which grew to 1.3%.
Outside of mainstream media, sales promotions, direct marketing and public relations all saw budget growth. A net 8% of companies increased sales promotions budgets (from 0% in Q4), while direct marketing budgets expanded for a balance of 6.0% of companies, up from 3.8%. PR saw only marginal budget growth, with a balance of 0.6%.
investment-areas-marketing-2022
Market research was one of the categories that “weighed down” the rebound a bit. Over the last two quarters of 2021, market research budgets had been on the rise, with a balance of 0.7% of companies increasing their market research budgets in Q3 2021 and 7% in Q4 2021. However, in Q1 2022, market research saw a net decline of -3.5%.
Before the final six months of 2021, market research budgets had been in a long-term decline. The proportion of companies planning to increase market research spending had only been greater than the proportion planning to reduce it four times in the previous seven years, most recently in the second quarter of 2015, when a net balance of just 0.6% said they would increase investment.
In 2020, Marketing Week found that market research had been on a decidedly downward trend ever since, with that decline accelerating over the course of Covid-19. The net balance of marketers who said they planned to reduce spending plummeted to a low of 42.2% in Q2 2020.
Mixed outlook ahead
The optimism brought by the lifting of Covid-19 restrictions is tempered by caution regarding the geopolitical situation as well as inflationary pressures.
Bellwether IPA author S&P Global has lowered its GDP growth forecasts for 2022 and 2023 from 4.0% and 1.8% to 2.8% and 1.2%, respectively.
This slow growth is expected to have a negative impact on advertising spending. The IPA has revised its figures downwards to 3.5% in 2022 and 1.8% in 2023, from 5.2% and 2.5% respectively.
The IPA expects current events to have little impact beyond the next two years. Forecasts for GDP and advertising spend beyond 2023 remain “broadly unchanged” from Bellwether’s last report.
When it comes to the companies surveyed, sentiments differ between company-specific and industry-wide perspectives.
Respondents were more pessimistic than three months ago about the financial outlook for the industry as a whole, with a net balance of -3.6% of companies reporting less optimism. This was virtually unchanged from the fourth quarter of 2021 (net balance of -3.8%) and thus the second highest degree of pessimism for more than a year.
In contrast, as far as their own businesses are concerned, a net balance of 6.6% of companies were optimistic about their outlook. That said, this was down from 7.6% in the previous quarter.
A net 14.1% of companies revised their marketing budgets upwards in the first quarter of 2022, according to the latest IPA Bellwether report. This figure is the highest since almost eight years ago, in the second quarter of 2014.
Marketing budgets have now seen growth for four consecutive quarters. However, the latest figure represents a significant increase from the previous quarter, when a net 6.1% revised their marketing spend upwards.
Nearly a quarter (24.1%) of surveyed companies increased their marketing spend in Q1 2022, compared to just 10.0% who revised their budgets downwards.
investment-marketing-2022
The increase in marketing spending reflects several countries emerging from the Covid-19 pandemic and means increased confidence among businesses that they will be able to continue without disruption from lockdowns or restrictions.
However, the IPA warns slovenia phone number list that the industry faces “increasingly strong headwinds” to its recovery, including inflation and the war in Ukraine.
Despite these significant challenges, companies are “very positive” about their budgets for the coming year. A net balance of 33.1% of the companies surveyed expected growth in their available marketing budgets for 2022/23.
Category Breakdown
Of the categories tracked by Bellwether, events saw the largest growth in marketing investment during the quarter . A net 18.7% of panellists reported increased spending in the channel, up from -3.9% in Q4 2021. The further easing of Covid measures “gave companies the confidence to plan larger-scale meetings with clients and set up exhibitions,” the report explains.
Advertising in mainstream media also saw “solid” budget expansion, with a net balance of 9.4% of companies reporting an increase in spending in this category compared to 3.1% in the previous quarter. Online advertising drove growth in this category with a balance of 18.6%, along with video, which grew to 9.0%, and published brands, which grew to 1.3%.
Outside of mainstream media, sales promotions, direct marketing and public relations all saw budget growth. A net 8% of companies increased sales promotions budgets (from 0% in Q4), while direct marketing budgets expanded for a balance of 6.0% of companies, up from 3.8%. PR saw only marginal budget growth, with a balance of 0.6%.
investment-areas-marketing-2022
Market research was one of the categories that “weighed down” the rebound a bit. Over the last two quarters of 2021, market research budgets had been on the rise, with a balance of 0.7% of companies increasing their market research budgets in Q3 2021 and 7% in Q4 2021. However, in Q1 2022, market research saw a net decline of -3.5%.
Before the final six months of 2021, market research budgets had been in a long-term decline. The proportion of companies planning to increase market research spending had only been greater than the proportion planning to reduce it four times in the previous seven years, most recently in the second quarter of 2015, when a net balance of just 0.6% said they would increase investment.
In 2020, Marketing Week found that market research had been on a decidedly downward trend ever since, with that decline accelerating over the course of Covid-19. The net balance of marketers who said they planned to reduce spending plummeted to a low of 42.2% in Q2 2020.
Mixed outlook ahead
The optimism brought by the lifting of Covid-19 restrictions is tempered by caution regarding the geopolitical situation as well as inflationary pressures.
Bellwether IPA author S&P Global has lowered its GDP growth forecasts for 2022 and 2023 from 4.0% and 1.8% to 2.8% and 1.2%, respectively.
This slow growth is expected to have a negative impact on advertising spending. The IPA has revised its figures downwards to 3.5% in 2022 and 1.8% in 2023, from 5.2% and 2.5% respectively.
The IPA expects current events to have little impact beyond the next two years. Forecasts for GDP and advertising spend beyond 2023 remain “broadly unchanged” from Bellwether’s last report.
When it comes to the companies surveyed, sentiments differ between company-specific and industry-wide perspectives.
Respondents were more pessimistic than three months ago about the financial outlook for the industry as a whole, with a net balance of -3.6% of companies reporting less optimism. This was virtually unchanged from the fourth quarter of 2021 (net balance of -3.8%) and thus the second highest degree of pessimism for more than a year.
In contrast, as far as their own businesses are concerned, a net balance of 6.6% of companies were optimistic about their outlook. That said, this was down from 7.6% in the previous quarter.