IPA Bellwether Q1 2014: Industry analysis
The Q1 2014 IPA Bellwether Report reveals the largest single upwards revision to marketing budgets in 14 years of data collection, marking the sixth successive quarter that marketing budgets have been revised up. Overall the 2013/14 financial year saw budgets increased to the greatest degree for seven years.
Here, Newsline has gathered views and analysis on the findings from Zenith UK, Carat, Vizeum and ZAK Media Group.
Tom Cijffers, managing director, Zenith UK
What will be the single biggest driver of growth in the next three months?
“The biggest driver in growth over the next quarter will be the mobile platform. As the Bellwether Report reveals, spend on search is increasing by 13.9 per cent. A large proportion of this increase is attributable to mobile, as more consumers are using these devices to search for brands and products while on-the-go.
“Our own UK ad spend forecast released last month reinforces this fact, showing spend on mobile is set to grow by £600m this year.
“This surge in mobile search ad spend is also reflective that consumer behaviour is finally catching up with these devices.
“Another robust area of growth will be TV and it’s fantastic to see main media ad spend rising at the largest rate in over 14 years. Spend on TV is increasing already, but it’s set to really take off mid-year and according to our forecasting the World Cup will contribute to a spike in mid-year spend on the platform, contributing to an overall rise of 5 per cent in 2014 to £3.6bn.”
What’s delivering results for clients right now?
“Our clients are finding search a very important area to invest in, which corresponds with the report findings. In particular, the FMCG sector is taking note of the potential of search.
Even though consumers are not necessarily searching for a particular brand, they are increasingly looking for solutions to problems and landing in the areas the brand lives, making search a highly valuable format to invest in. This increase is also bolstered by the ability to self-serve, enabling SMEs to spend small amounts on search ads, thus driving wider growth of the format.
“We are also seeing clients derive greater value from creating bespoke customer journeys. Brands are now looking to develop more sophisticated ad targeting by tracking previous interactions with the brand prior to visiting the site or searching for a brand. This is enabling brands to better tailor messaging and price, making ads more relevant for each individual and driving ROI.”
James Hankins, head of integrated planning, Vizeum
“With perfect synchronicity this quarter’s IPA Bellwether Report is released on the same day that we’ve found out that wages growth has risen above price inflation (in real terms) for the first time since Spring 2010 (although hopefully this time there will be a more sustained period of growth).
“The substantial growth levels in marketing budgets certainly suggest that marketers believe consumers are in the right mindset to begin buying again and consumer confidence data backs this up.
“The thing to watch is that wages still need to consistently grow above price inflation to overcome the recent trends which put households 10% worse off than before the recession. In reality this provides people with the key insight into the economy – it’s all about confidence. It may not matter that households have very little disposable income, it’s that they feel more positive and as behavioural economists have repeatedly shown, being in a good mood makes you more receptive to messaging.”
Ewa Nuckey, planning director, ZAK Media Group
“While the big winner in Q1 is media, this quarter, just like throughout 2013, sees a continued upward revision of marketing spend on internet. To us this signals not only an overall confidence in the economy but also in the importance of digital as a means of communicating and engaging with consumers, customers and trade partners.
“Today marketers are faced with an undeniable digital requirement. We live in a world where Brits are spending on average six hours a day online, smartphone penetration is expected to rise to 75% in 2014, innovation is concentrating on using clothing and accessories to keep us connected, personal and corporate conversations are shared and enjoyed (or lambasted) publicly.
“This all-encompassing digital landscape means that brand owners are quickly realising that simply having a digital presence is not enough – they are exploring how their brands could be local, mobile, social, content creators/curators, apps and games.
“In our view it is not just the increasing use of the internet by people that is driving marketing spend. The need for a clearly defined multi-channel digital strategy is increasingly driving both brand and trade marketing departments to invest resources in new digital and technology solutions that create stronger connections and reciprocal value for all involved.
“As this need is only starting to be addressed in many companies, we predict that the rise in internet budget spending will continue well past 2014.”
Jon Pile, client director, Carat
“The latest Bellwether Report overall paints a very positive picture for the marketing sector, and linked to the latest news showing wages rising faster than inflation, provides more positive indicators on the economic recovery. This is backed up by data from our proprietary Consumer Connection Study, which shows positive shifts in consumers’ attitudes towards their financial situation. Within this data we can see that traditional media growth is outstripping internet growth, but really this shouldn’t be a surprise.
“Internet growth never really slowed over the recession, dipping into negative figures only briefly during 2008, whereas total marketing spend fell more sharply and has fluctuated around zero growth for several years. Therefore, the potential for a sharp increase is much greater especially against a backdrop where we are still consuming an average of 25 hours of TV a week.
“Over the course of the recession marketers became far more focused on return on marketing investment whether in a traditional sense of additional revenue or measuring shifts in brand effects against investment.
“There has also been a trend towards understanding the interplay between brand and commercial metrics. The need to show a demonstrable impact of marketing investment has fuelled the on-going surge of internet spends, but it has also had an impact on evaluation and traditional media.
“Econometric modelling is now a core part of a marketer’s armoury to show the effectiveness of any activity. For example, our clients use our Integrated Communications Evaluation tool to better understand how and why communications are affecting consumers. This golden age of evaluation is arguably giving marketers and their financial directors greater confidence to invest in traditional media.
“Media owners have looked at what can be learned from the increased use of digital media, such as ITV’s greater use of second-screening around its live formats, or better use of technology and data with Sky Adsmart. This increased targeting makes traditional media a more attractive prospect for clients.
“Understanding these ecosystems, and ensuring that advertising plans maximise the effect of both traditional and digital channels to engage with consumers, is key to driving business value. We will see the greatest results by understanding the interplay between these channels and how consumers wish to engage with brands.”