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Ad spending growth in UK hits three-year low

14 January 2016

The number of British companies that raised their advertising budgets in the fourth quarter of 2015 slowed to its lowest level in nearly three years as concerns over the economy grew, according to an industry survey today.

The IPA Bellwether report said a net balance of 0.5 per cent of companies increased their advertising budgets, compared with 4.4 per cent in the previous quarter and 6.1 per cent in the same period the year before.

While the number was the lowest in 11 quarters, it still meant advertising budget growth had been sustained for 13 successive quarters.

Concerns over Britain's economy, which has outpaced many of its peers in the developed world over the past couple of years, are beginning to weigh on consumer confidence after growth slowed to 0.4 per cent in the third quarter, according to official figures published in December.

An upcoming referendum on a possible exit from the European Union is adding to uncertainty over the future.

Companies' confidence in their own financial prospects slowed to a net balance of 20.4 per cent from 22.4 per cent the previous quarter.

However, a net 24.6 per cent of advertisers said they expected to see growth in their total budgets for the coming year.

"Companies are maintaining a keen sense of cost-consciousness and a value-for-money approach to their marketing budgets. Such forces have probably weighed on growth in the final quarter of the year," said Paul Smith, senior economist at Markit and author of the report.

"We therefore wait to see if Q4 2015 proves to be a nadir in the current cycle or whether we have a little way to go before we again see a sustained upward trajectory."

Growth was strongest in internet advertising, which posted a 6.9 percent rise, followed by traditional media, PR and events.

However net reductions were seen in sales promotions, market research and direct marketing.

The IPA Bellwether report was drawn up from a survey of around 300 companies based in Britain.

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