Growth in British companies' advertising spending budgets has hit its highest in more than two years, a survey showed on Wednesday, suggesting that Brexit's impact on the sector might be softer than previously expected.
The IPA Bellwether report, which is researched and published by IHS Markit on behalf of the Institute of Practitioners in Advertising, said its forecast for advertising spending growth was revised up to 1.9 percent for 2016, compared with its previous forecast of a 0.2 percent decline.
July's report had shown that companies would reduce advertising spending because of uncertainty created by Britain's vote to leave the European Union.
However, Wednesday's report said that a net balance of 13.4 percent of companies increased their budgets in the third quarter, up from 10.7 percent in the previous quarter.
Overall budgets grew at the highest rate since the second quarter of 2014, the report said, as companies respond to competitive pressures and grapple with the result of the EU referendum.
"A number of companies are looking through the uncertainty and see a new range of opportunities for their businesses to grow and flourish,” said Paul Smith, senior economist at IHS Markit.
Event and internet budgets grew the most in the third quarter, while main media advertising fell for the first time since 2013.
The forecast for 2017 advertising spending was also revised, with Bellwether adjusting it to a decline of 0.7 percent. That represents an improvement from the previous forecast of a 1.3 percent fall.
Bellwether expects advertising spending to return to growth in 2018.
"The outlook remains uncertain, especially when trying to understand what the impact of the EU referendum vote will be, and financial prospects have somewhat softened as a result," Smith said.
(Reporting by Mamidipudi Soumithri in Bengaluru; Editing by David Goodman)