Comment: Industry reaction to Q3 IPA Bellwether report

q3-ipa-bellwether-Image by Steve Buissinne from Pixabay(2)

Marketing budgets are still growing, but the outlook is dimming, according to the latest IPA Bellwether report.

The cost-of-living-crisis and Russia’s invasion of Ukraine are at the centre of slowdown.

So we’ve been asking our leading industry experts for their take on the report…

Helen_spencer_strat_houseHelen Spencer, Planning Director, Strat House 

 “The IPA Bellwether report is an eye-opening reminder of just how challenging the current economic climate is. 

“And it’s no surprise that marketing budgets have slowed again in Q3 because of this. 

“When any economic crisis hits, particularly a recession, marketing budgets are typically the first to be reassessed and pulled back. 

“But, as the evidence from previous periods of uncertainty has taught us, those who have kept calm and carried on investing in their brand will undoubtedly benefit in the long-term.

“With the World Cup and Christmas, it’s going to be an even busier “golden” Q4 quarter for brands and an even more important time to showcase brand value. 

“So, having a clear marketing strategy, with target channels, will be imperative to managing spend wisely and implementing it effectively. 

“Rather than further growth in Q4, we may see brands push their budgets into Q1 as they continue to assess the economic situation.

Elliott Millard

Elliott Millard, head of planning, Wavemaker UK

“It’s interesting the way different channels are seeing budgets removed. With TV bearing the brunt of rampant media inflation, it may not be surprising to see budgets shifted around here. 

“However, it feels like an oversight that the likes of press and OOH are experiencing harder declines than others. Despite both being scaled, public touchpoints that can act as reassurance in difficult times.

“It’s a trend that we’ve also seen in Wavemaker’s Media Mix Navigator, which allows brands and agencies to interrogate optimum media mixes. 

“It raises warning signs that some brands are shifting to short-termism. Channels like press, for example, look to be disinvested in by the industry artificially fast. 

“It’s not always the wrong thing to do, but there is also risk in over-investing at the bottom of the purchase funnel. Once a brand’s credentials have slipped, it becomes more expensive to rebuild them.

“For savvy brands (with means), there is also an opportunity here. There is a cost advantage to be had in underused space.

“Bearing in mind that OOH is currently an attractive option for bargain hunters as is – UK outdoor advertising prices have fallen by 3.1% since pre-covid times. 

“Additionally, exploiting the channels others are not present in will likely give brands a leg up against their competition.”

Alex Charkham - FuseAlex Charkham, Chief Strategy Officer, Fuse

“While spend on sport and entertainment partnerships doesn’t form a specific part of the analysis, we can take some confidence from the positive story found in both heightened ad spend and the growth of events over the third quarter.

“The appeal of sport and entertainment partnerships – sometimes considered a ‘luxury investment’ by many brands – has grown in the last few years due to factors impacting advertising effectiveness, particularly the inflating cost of media and audience fragmentation.

“Specifically, sport’s ability to command mass audiences, particularly on TV, is an attractive proposition for brands seeking a solution to the problem of media fragmentation. 

“The ability to lock-in price over a multi-year period also means that brands can ride the wave of inflation over the mid to long-term.

“The growth of events is also another signal that businesses and customers alike value live moments – a huge part of sport and entertainment’s appeal. 

“Despite the pending recession and cost of living challenges, we believe that sport and entertainment will be something that people will want to pursue and prioritise. 

“As a result, brands will be asking more questions about how to capitalise on the increasing appeal and relevance of ‘passion point marketing’.

Michael-Richards-2.jpgMichael Richards, Managing Director, alan

“The Q3 2022 IPA Bellwether Report makes quite gloomy reading at first glance but there are nuggets of opportunity buried within.

“Budgets both client side and for customers are squeezed, but there is renewed interest in the likes of energy saving and eco friendly products alongside growth in events and online and video advertising.

“Now is the time for businesses to really look at their offerings and how they can remain true to their core but flex to be truly customer centric.

“Be bold. Be brave. Find your provocative truths around what you do and how you do it and there are rewards to be reaped by brave marketers willing to break the mould.

Emma-Ellis.jpegEmma Ellis, Managing Director, Interbrand UK

“The latest IPA Bellwether report is a salutary reminder of just how difficult the current economic climate is.

“For brands, advertisers and businesses at large, marketing budgets may have increased in Q3, but the slowing of that growth along with the depressed financial outlook, shows the way the wind is blowing. 

“In any recession marketers must contend with budget cuts and shoppers tightening their belts, but today they must add into the mix increased energy bills, rising cost pressures and high inflation.

“When there is an instinct for businesses to retrench, it is more important than ever for brands and advertisers to focus on the value of their brand. 

“To remain strong, the brand needs to be focused on deeper connections with consumers and a higher focus on the customer experience.

“Now more than ever brands need to lead with empathy and deliver greater affinity if they want to increase the feel of a positive connection with the brand.

Marianne-Yallop-.jpegMarianne Yallop, Global Head of Client Services, Redmill Solutions 

“As the cost of living crisis bites and marketing budgets slow, advertisers need to think carefully about how they use their creative in Christmas campaigns. 

“Especially brands with big budgets that will have likely created ads months ago – they should be especially sensitive to consumer spending sentiment, and cautious not to be seen as blowing hard cash. 

“Budgets need to be kept under control, with gimmicky but costly campaigns running the risk of alienating consumers. 

“Advertising is all about trust, and this year in particular the line between gaining a close customer relationship and being patronising will become thinner than before. 

“To avoid upsetting consumers, brands need real-time campaign media data in order to know exactly where their spend is headed, pivot campaigns to be more effective, and ultimately, aid in marketing decision making”.

Charlie Johnson - Digital ElementCharlie Johnson, VP International, Digital Element

“Usually, Q4 would be a time of high spending for both brands and consumers, but in response to the cost-of-living crisis, many are squeezing their budgets for all their worth as revenue drops. 

“Customers will only buy if they’re absolutely convinced, which makes relevant online ads and a positive customer experience a priority. 

“While many businesses might be cutting their spend, now is time to invest in both communications and technology to get ahead of competitors.

“This puts innovative tools that provide quality data at the top of the list, to help businesses optimise where possible and provide proof of ROI. 

“With contextual targeting a huge contender in a privacy-first advertising space, IP data can be invaluable when it comes to user insights such as geolocation and connection data.”

Sivan Tafla - Total Media SolutionsSivan Tafla, CEO Total Media Solutions

“Gloomy economic horizons will have publishers working harder than ever to diversify their revenue streams and lessen their reliance on tightening ad budgets. 

“Whether audio, video, subscriptions or eCommerce, publishers cannot just dive headfirst into these new ventures. 

“Requiring huge amounts of money, time, and labour to implement, they need to be certain they’re headed in the right direction.

If a new channel is to succeed, publishers need to focus on quality and forge close relationships with their audience. 

“First-party data is invaluable in building the trust between audience and publisher, while allowing for more tailored, valuable content. An effective first party data strategy needs to be top priority for every publisher.”

Lucia_MastromauroLucia Mastromauro, MD UK, Acceleration

“Despite the challenging times, brands recognise the value of continuing their marketing efforts. 

“To make best use of their budgets they will need to adopt an always-on transformation approach to advance their digital maturity, making effective use of data and experimentation to allow their organisation to be agile, do more with less, and deliver measurable business results as the market evolves.”

Andy Ashley - SmartFrame TechnologiesAndy Ashley, Global Marketing Director, SmartFrame Technologies

“As expected, inflation and the cost-of-living crisis have heavily impacted business decisions and marketing budgets. 

“Despite this, there are developments in the industry that must be upheld: a commitment to privacy, brand safety, and creative that is both relevant and engaging. 

“Brands and agencies need partners that are versatile, can cover a lot of ground, and truly drive value. 

“In the wake of cookie deprecation, this means nailing contextual and being able to provide proof of ROI, as well as focusing on transparency and clarity throughout the whole supply chain. 

“Eye-catching visuals and effective ad placements are more important than ever when budgets are squeezed, and we need solutions that can deliver on both to drive ad success.”

Paul-Lowrey-Azerion.jpegPaul Lowrey, Director of Strategy, Insights and Marketing Azerion 

“Whilst there are some positives from the Q3 IPA Bellwether report, there’s no doubt that the impact of the cost-of-living crisis will be felt harder into Q4 and early 2023.

“Audience behaviour and consumer spending is changing rapidly so if brands are to respond and maximise their marketing performance with ongoing budget cuts, a greater focus on securing ‘value’ beyond the transactional media investment will help.

“As such, our concept of value needs to move beyond ‘price’ to greater recognition of how media partners can help advertisers understand audiences all the way through to how we creatively engage with them. 

“Increased collaboration of expertise and knowledge alongside the transactional product investment will be crucial to delivering the brand performance all advertisers need.”

heather lloyd nano

Heather Lloyd, Head of Product Marketing, Nano Interactive

“We shouldn’t be surprised that the Q3 2022 Bellwether points to a slowdown, given the wider economic uncertainty across the country.

“However, some argue this volatility might bring positives as well as negatives in some quarters. Since digital in particular favours agility and almost real-time flexibility, it’s likely to benefit versus other channels. 

“In fact, the report may even suggest this is already occurring: comparing clients’ Q3 and Q2 spend, ‘other online’ came out top of the list, with a +9.3% net balance. Even the ‘video’ category, covering TV, as well as online video and cinema, couldn’t match this number.

“Even if, as the report suggests, the UK’s recession is a short-lived one, it seems obvious brands and agencies will look to do more with less. 

“Tactics and solutions that are able to run independently, and which don’t incur risk further down the line may profit. And as the cookie keeps crumbling, ID-free and contextual targeting seem only more relevant in time.”

david mclean news live - mediashotz

David McLean, MD, News Live – News UK Events 

“It’s heartening to see that events remain a key avenue of marketing growth, with one respondent citing that businesses will need to increase their profile, with a sharp increase in the need to network and build contacts. 

“This echoes our own experience as we’ve seen investment move towards face-to-face opportunities and projects as businesses want to re-engage audiences. 

“That said, there’s still a market for virtual events but the quality and experience have to stand out.

“With a growing demand post-pandemic for new formats and types of live experience, we believe that excitement and demand for events is stronger than it’s ever been before. 

“In particular, we’ve seen B2B events growing exponentially and due to the current political climate, advertisers are looking to deliver more innovative and relevant events that showcase what is currently happening in the world today.

“To succeed in the year ahead, advertisers and their partners should ensure they are collecting data effectively to gain insight into what success looks like.”

emre_fadillioglu_storylyEmre Fadillioglu, CEO Storyly

“The IPA Bellwether report remains an important barometer for the state of marketing activity within the UK, with media spend fluctuations also providing indicators for broader communications trends. 

“While it is disappointing to see marketing budgets fall for the first time since early 2021, it is hardly a surprise as economic headwinds started to be felt in Q3.

“One notable area of continued growth is video. This is being driven by continued format innovation. 

“In 2022, eMarketer announced that time spent on TikTok exceeded YouTube for the first time, at over 45 minutes per day. 

“Closely followed by  Instagram Stories, YouTube Shorts, and Snapchat Spotlight, amongst others, this explosion in short-form content has driven brands to re-evaluate how video is incorporated into their marketing strategies. 

“When everyone can now be a creator, it is not enough to rely simply on a linear broadcast of a branded message. 

“Many brands are looking to introduce user-generated video into their own digital experiences, with the aim of spotting and capitalising on their next micro-influencer. 

“Others are leveraging the continued innovations in the video format, with interactive overlays, shoppable experiences, and gamification all adding to the branded video experience.

“Audio-visual marketing may have started in TV, but with the continued growth and innovation in online video revealed in the IPA Bellwether report we can be sure it will remain one of the dominant marketing channels for a long time to come.

Rik_Moore_the_kite_factoryRik Moore, Managing Partner of Strategy, The Kite Factory

“The key watchword off the back of this Q3 2022 IPA Bellwether report is ‘navigation’.

“The challenges the report highlights are writ large across the ‘Threats’ verbatims from panellists. 

“However, there is nuance here, and some green shoots to recognise – be that encouraging renewed interest in eco-friendly and energy saving products, through to continued growth in online and video advertising, plus resurgence in the events sector.

“This is where ‘navigation’ comes in – if we can help clients identify and turn those green shoots, wherever relevant, into new opportunities and competitive advantage, this will contribute their ability to weather the storm and come out the other side stronger.

“At the IPA’s own EffWorks Global 2022 conference last week, Dr Grace Kite from Magic Numbers spoke very eloquently about how different sectors could be impacted in 2023, grouping them into ‘Victim Sectors’, ‘Secure Sectors’ or ‘Beneficiary Sectors’, based on survey data about consumers intention to change spending habits next year. 

“This informs different next steps and behaviours for advertisers to take dependant on which situation you find yourself in.

“Aligning this kind of analysis with the positive stories and resultant opportunities hidden within this quarter’s Bellwether, will create ways forward amidst the gloom.

Simon-Wardropper-CEO-Realtime-Agency.jpegSimon Wardropper, CEO Realtime Agency

“Right now, inflation is impacting lower-income households at a higher rate than high-income households as the cost of everyday staple goods and services (such as energy, clothing, and food) are quickly rising.

“The first thing to note is that marketers of these everyday goods may not see as severe of an impact on results as marketers of simple luxuries or non-essentials. 

“Although these sorts of goods have previously been accessible to less-affluent households, they won’t be as much during this time.

“Rather than cut budgets, which often can have a disproportionately negative impact on algorithm efficiencies, share of voice, and business revenue, we’d instead recommend restructuring spend and pacing. 

“For instance, the World Cup is set to overlap with Black Friday and holiday shopping periods this year – three very expensive times to advertise. 

“If you can afford to scale down during these hot periods, front-load budget prior to these events, or even reserve until Q1, do so.

Measurement will also be massively important here for marketers. Cookie-based attribution modeling (like multi-touch attribution) is progressively becoming more unreliable and can lead to ill-informed placement of budget due to incomplete data sets. 

“We would recommend testing a non-cookie-reliant attribution method now, such as marketing mix modeling, to ensure you’re best placing your brand to see high returns on investment.

“Lastly, we’d recommend that marketers be conscious of empathetic and helpful messaging that will ensure their consumers’ dollars stretch further – for instance, we’re seeing supermarkets – such as Sainburys and Asda – begin using content educating consumers on how to keep food fresh for longer.”

Peter_Wallace_GumGumPete Wallace, MD EMEA, GumGum

“Despite a marked dampening of business confidence in the latest Bellwether report, with budget cuts being seen across the majority of monitored segments of marketing spend, the latest survey does not paint a picture of unrelenting bleakness.

“Drilling down into the data on main media marketing budgets, for instance, revealed that while big-ticket advertising campaigns relating to TV and radio fell for the first time since Q1 2021, the decrease was only mild. 

“And while out of home saw a reduction, too, there was growth recorded elsewhere, in other online advertising and video. It’s clear that panellists were still able to identify opportunities for the coming months.

“And with many companies seeking to promote their brands’ visibility across digital channels, this bodes well for continued evolution and maturation of the landscape – with cookie-free and contextual approaches being adopted by more marketers as the industry moves on from the ‘Wild West’ days of the past.

James_Leaver_multilocalJames Leaver, founder and CEO, multilocal

“The latest Bellwether survey paints a clear picture of retrenchment in some quarters, with companies faced with a darkening economic picture.
“Yet the key in increasingly competitive and challenging times is to focus on efficiency in order to turbocharge marketing impact.

“The reality is that, by removing geographical barriers, streamlining programmatic ad placements, and leveraging cutting edge technologies, marketers can accelerate growth in any market, at any time. 

“Indeed, new technologies are enabling optimisation of the programmatic advertising supply chain; resulting in reduced fees and, in turn, increased investment in media space. 

“These technologies also facilitate diversification – enabling brands to outsmart, rather than outspend, their competitors.

“It was therefore pleasing to see that considered budgeting in the digital marketing space – an opportunity frequently noted by Bellwether panellists – was once again a notable feature of the latest survey. 

“Clearly, the most innovative companies know that they can navigate challenging market conditions by promoting their brands’ visibility across digital channels.

Matt-White-VP-EMEA-at-Quantcast.jpgMatt White, VP EMEA at Quantcast 

“Given the current economic climate, many will be surprised to see that advertising spend has increased yet again. 

“It’s often not as simple as marketing and advertising teams switching off activity when times are tight though, as we’ve seen here.

“Some will see times of turmoil as an opportunity to double down on investment to stay ahead of the competition, while others will no doubt have started booking in their campaigns for the FIFA World Cup coming up in Q4.

“The number one reason ad spend has increased again is aligned to the TV market – and in particular, CTV. 

“During the cost of living crisis, people throughout the UK will have made a concerted effort to enjoy quiet nights-in to save for more difficult times ahead. 

“Simultaneously, CTV offers the viewer more content than ever before. With increased content comes cheaper advertising rates, which then drives more investment. All ships rise and advertising teams are taking advantage.”

Jo-Eckersley-bubblJo Eckersley, CEO, Bubbl

“The latest IPA Bellwether report shows a mixed picture in terms of investment in the advertising ecosystem. 

“As the digital landscape continues to adapt and mature, this is unsurprising – even without a worsening economic outlook.

“What’s more, faced with calls for increased transparency and privacy within digital services, all online platforms must be easy-to-use and leverage the principles of trust, interoperability and frictionless collaboration in order to boost uptake and increase trust in a new generation of privacy-preserving platforms.

“And, while the cost of living crisis bites and discretionary spend cutbacks continue, consumer purchasing power does still exist – even if audiences are being more selective. 

“In this context, mobile channels, and video, continue to see growth, with solid upturns in both of these segments reflective of company efforts to generate greater brand visibility in the digital space. 

“Marketers must invest wisely and ensure that communications boost engagement and trust from their audiences.”