72% of UK businesses cut marketing budgets
The UK’s creative agencies are facing mounting challenges as their clients, big and small, slash marketing budgets and freeze current spend, according to insights from fintech business lender MarketFinance. Three quarters (72%) of the UK’s businesses reported that they would freeze marketing spend as they seek to plug gaps in their cash flow owing to financial difficulties from the impact of COVID-19.
With revenues drying up, agency bosses are at a loss on what steps to take next to balance their books. Four out of five businesses reported that revenues have fallen, on average, by 53% since the onset of lockdown measures (compared to this time in 2019).
The government-backed Coronavirus Business Interruption Loan Scheme (CBILS) which offers finance facilities to businesses of up to £5m over 6 years (interest-free for the first year) appeals to half (52%). The remaining half (48%) are fearful they would not be successful for the scheme because they have existing business loans and servicing an additional debt would cripple them. Additional concerns over their cash flow and business models mean they are reluctant to apply.
This leaves the industry in a precarious position with 85% of creative agencies indicating that they will run out of money by June 2020. It comes as no surprise that three quarters (73%) support the government’s plans to cover the wages of employees who will need to be furloughed (the Coronavirus Job Retention Scheme). The future of the industry remains uncertain with falling revenues and uncertainty about how long before the business environment returns to normal. Three quarters (75%) of agency bosses believing that it will be at least a year before business normalises.