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Marketing budget growth losing further momentum, says IPA Bellwether Report

Budgets are growing at the slowest rate since the start of 2016, according to the IPA Bellwether Report

Pictured: challenging market conditions and cost consciousness have contributed to sluggishness

Marketing budgets are growing at the slowest rate since the start of 2016, according to the IPA Bellwether Report for Q1 of 2018.

The survey signalled that while events budgets had continued to grow - extending the current sequence of expansion to four-and-a-half years - challenging market conditions and cost consciousness had contributed to sluggishness.

In terms of advertising spend, the internet continues to perform best while traditional media has slipped into contraction – with muted growth predicted for 2018 and 2019.

Dr Paul Smith, director at IHS Markit and author of the Bellwether Report, said: “The ongoing slowdown in marketing budget growth comes as little surprise in the context of the challenging business environment and disconnect in recent surveys between budgets and subdued financial prospects.

“Rising costs and the ongoing uncertainty that exists over the future direction of the UK economy in a post Brexit world have led to caution and belt-tightening across a number of sectors, especially those more exposed to retail and consumption.

“Despite losing clear momentum since last summer, the positive news is growth is being sustained meaning the longest bull-run in the survey history continues. Whether this can carry on remains to be seen. Although the latest survey shows anticipated growth in 2018/19, the degree of optimism is the lowest in five years.”

Paul Bainsfair, director general of IPA, said: "Despite the slowdown, this quarter's results mark over five years of successive upward revisions to marketing budgets, signifying that regardless of external pressures - particularly Brexit uncertainties - most marketers still appreciate the value of advertising in building and maintaining their brands.

“Once again we are also seeing significant investment in internet budgets - for 35 quarters continuously – showing that in an 'always on' world, marketers are following the eyeballs. While we welcome this, it is worth remembering that the evidence shows that the most effective advertising achieves a 60:40 balance of brand building to sales activation media."

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