UK advertising survey sees decline in adspend post-Brexit vote

Reuters: Companies will cut spending on advertising in Britain over the next two years as the country’s economic prospects are clouded by uncertainty triggered by the vote to leave the European Union, according to an industry survey on Thursday.

The IPA Bellwether report said that due to the uncertain outlook following last month’s Brexit vote, it has downgraded its adspend forecasts for both 2016 and 2017. Bellwether has downgraded its adspend forecasts to -0.2% for 2016 and -1.3% for 2017, its first prediction for a fall in adspend since 2013.

It had previously predicted 3.3% and 2.7% growth in adspend for 2016 and 2017 respectively.

“While the uncertainty in the economy caused by the vote to leave Europe continues to linger, we will experience an inevitable period of flux – as reflected in the Bellwether’s downgrading of adspend forecasts,” said Paul Smith, senior economist at Markit and author of the report.

Marketing budgets were revised markedly higher in the second quarter, extending the current record growth period to 15 consecutive quarters, the report said

A net balance of 10.7% of companies increased their budgets, compared with 3.0% in the previous quarter. It is also the highest reading for a year.

Despite the growth, the second quarter showed an increasing degree of pessimism about wider industry prospects.

Sentiment towards industry financial prospects dropped to the lowest level in 13 quarters, from -6.5% in Q1 to -8.1% in Q2.

Growth was strongest in events, which posted a 13.4% rise, followed by followed by internet, traditional media and PR. However net reductions were seen in sales promotions, market research and direct marketing.