U.K. Marketers Gear Up for 2024 Budget Boost

U.K. marketers have shifted from caution to quiet optimism as they map out their 2024 spending. According to the quarterly Bellwether ad forecast from trade body the Institute of Practitioners in Advertising (IPA), the final quarter of 2023 saw marketing budgets increase to their highest level in almost a decade. The survey, which gleans responses from 1,000 of the U.K.'s top businesses, found marketing spend to have risen by a net balance of 14.7% in Q4 2024. This was up sharply from a modest 5.3% rise in Q3, and it marked the highest uptick to budgets since 2014. When it came to 2024 planning, 29.4% of companies said they'd be increasing budgets over the next 12 months. The show of optimism comes amid the political uncertainty of a looming general election and an unexpected rise in inflation. Despite this challenging backdrop, marketers are remaining proactive, planning for the long term rather than withdrawing into cost-saving mode. The Speed of Culture Podcast: What Do 2023 Holiday Shopping Trends Mean for 2024 Retail Spending? Events including the 2024 Olympic Games and the UEFA Euro 2024 tournament, which offer sponsorship and brand-building opportunities, look set to help this trajectory continue. Joe Hayes, principal economist at S&P Global Market Intelligence and author of the report, said the resilience of U.K. marketing continues to be at odds with the worsening economic climate businesses are facing. "The U.K. economy is expected to endure a shallow recession, which will end in the first half of 2024, and our data clearly show more companies are prepared to ride out the bumps to put themselves in a strong position when the recovery phase kicks in than those that aren't." Where are budgets going? Sue Benson, managing director at The Behaviours Agency and IPA city head for Manchester and North West, said both agencies and clients will breathe a sigh of relief at this quarter's report. "We have another fun-packed year ahead of us, with recessionary pressures, an election, the Olympics and Euros all set to try our marketing resilience. Plus, we’re seeing evidence of consumer behavior changes that were born out of the cost-of-living crisis now becoming a habit," she said. "Marketers need to use this newfound optimism and possible budget upweights to double down on brand investment, ensuring their brands deliver on the value exchange with their customers.” Events was the best-performing subcategory of marketing in the busy 2023 holiday trading period with a 15.9% upturn. Direct marketing also had a successful three months, noting a 12.6% increase. These two categories were the principal drivers of total marketing budget growth at the end of 2023 as expansions of a more modest nature were seen in PR (1.9%) main media, including TV and digital (1.9%). We have another fun-packed year ahead of us, with recessionary pressures, an election, the Olympics and Euros all set to try our marketing resilience. Sue Benson, managing director, The Behaviours Agency Optimistic preliminary budget setting was seen in five of the seven Bellwether categories. Unsurprisingly, events is expected to have another strong year, with 17.8% of marketers boosting their budgets for 2024/25. Since the last Bellwether Report, there has been little change made to S&P Global Market Intelligence's forecasts for the U.K. economy overall. In fact, it's expected to begin 2024 in a shallow recession, and the outlook for the remaining quarters is challenging. For the year as a whole, S&P’s forecast is for a 0.1% contraction as high borrowing costs and still-elevated inflationary pressures constrain economic activity. Consequently, S&P forecast that U.K. ad spend will decline in real terms in both 2023 and 2024 (by 0.6% and 0.7% respectively). This is in line with global forecasts, which expect ad spend growth to slow in 2024. The positivity gap Despite a robust outlook, the latest Bellwether showed a widening gap between company-level and industry-wide financial prospects during the final quarter of 2023. In short: Companies feel more bullish about their growth prospects compared to three months prior. However, they're still concerned about the forecast for their sector as a whole. When it came to the ad industry's future, just 12.6% of respondents felt positive. 7 CMOs to Watch Out For in 2024 Paul Bainsfair, the IPA's director general, said despite the overall sunny outlook advertisers weren't out of the woods yet. He's seen anecdotal feedback that some companies noted plans to price their goods and services more competitively in a bid to gain market share, a risky strategy. He finished: "While this is good news for the consumer, it is further proof that companies are experiencing a tough trading environment. On this point, with the evidence showing that investing in advertising helps protect sales when businesses raise prices, it may prove more profitable for companies to increase their advertising than reduce their pricing.”