Growth in PR spend accelerates to two-year high, says IPA Bellwether Report

Expenditure on PR by marketing executives has grown at the fastest rate since records began two years ago, and PR is expected to be among the main beneficiaries of a sharp increase in marketing spend in 2015, according to new research.

Expenditure: Firms expect to increase marketing budgets, although 2014 could have been the peak year for growth
Expenditure: Firms expect to increase marketing budgets, although 2014 could have been the peak year for growth

The Bellwether Report found the increase in overall marketing spend actually more than halved in Q4 2014. There was a net balance of 6.1 per cent of companies registering an increase in budgets during the quarter, down from 12.6 per cent in Q3 2014 and its lowest since the third quarter of 2013.

However, growth in the PR sector in Q4 was comparatively strong at 6.6 per cent, ahead of direct marketing (3.9 per cent), events (2.4 per cent), sales promotion (2.4 per cent) and market research (0.6 per cent).

The highest upward revisions were made to internet, with a net balance of 15.1 per cent. This was up from 14.5 per cent in the third quarter, and marks the highest reading since Q2 2013, says the report, produced by Markit on behalf of the IPA.

Within internet, the 'search' category (defined as paid search or search engine optimisation) recorded a net balance rise of +15.7 per cent, up from +9.4 per cent in Q3 2014, marking 22 consecutive quarters of growth. Main media advertising also recorded growth (+6.7 per cent) although this was down from +9.2% in Q3, marking a one-year low.

Main media advertising also recorded growth (6.7 per cent) although this was down from 9.2 per cent in Q3, marking a one-year low.

The only category to report a decline was "other" (-10.5 per cent). This includes any paid for marketing that isn't main media, internet, direct marketing, sales promotion, PR, events or market research.

In terms of actual spend, plans for the 2015/16 budget year have been set to their highest levels in eight years, the report found.

A net balance of 30.6 per cent of companies anticipated growing their marketing budgets relative to 2014/15 levels. "Events, PR and main media are expected to benefit most from this uplift in total budgets," the report says.

James Goddard, chief executive of JJ Marketing, said: "In the latest Bellwether Report it’s great to see marketing executives signalling the greatest upward revision to public relations marketing budgets for nine quarters during Q4 2014 – the highest reading since data was first collected in Q4 2012 and extending the current period of growth to exactly one year. This bodes extremely well for continued growth in public relations spend into 2015.

"Despite the uncertainties created by the upcoming general election, the likelihood of interest rates starting to rise in 2015 and ongoing worries about the Eurozone, these figures should send a very upbeat message to the wider economy."

Chris Williamson, chief economist at Markit, said: "The further upward revision to budgets at the end of last year rounds off what looks to have been the best year in terms of marketing expenditure growth in the history of the Bellwether Report, and 2015 could be even better. The planned increase in marketing budgets for the coming year is more aggressive than anything we’ve seen since data were first collected back in 2000.

"However, it’s clear that business optimism has cooled. Given the upcoming general election, the likelihood of interest rates starting to rise in 2015 and ongoing worries about the Eurozone, it’s not surprising that we are seeing companies report increased uncertainty about the year ahead. We’re therefore forecasting a further solid rise in marketing and advertising spend in 2015, but expect that 2014 will prove to have been the high-water mark in terms of growth in the current upturn."

The research, by Markit on behalf of the IPA, pointed to an improvement in optimism regarding companies’ future financial prospects.

A net balance of 30.7 per cent of companies indicated they had grown more optimistic compared with three months ago, although this was down from 38.6 per cent in Q3 2014. Confidence regarding wider industry financial industry prospects also remained positive at 16.2 per cent, although down from 30.4 per cent in Q3, marking the lowest level for six quarters.

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