Bellwether: Industry reaction

Phil Macauley, EU managing director, Quantcast

Putting aside the headline slight slowdown in overall growth, we’re encouraged that more marketers are recognising the need to invest in quality data – potentially a key driver of growth.

The effective use of data to deliver relevant brand advertising – prospecting alongside smart retargeting – could also account for an expected decline in pure direct response marketing, a blunt instrument when not done properly.

Generally, as brands get to grips with digital, figuring out what channels, technologies and approaches work for them – they looks for more sophisticated and effective solutions. Alongside better data, factors such as increased accountability and better attribution solutions are making the case at board level that programmatic can deliver relevant and effective advertising.

Uncertainty, both political and financial, will always dent advertiser optimism and, these days, create a flight to the new security of digital media. With the spectre of the EU Referendum, turmoil in the Chinese markets and warnings from economists to ‘sell everything’ looming over business confidence, 2016 promises a very uncertain year.

Therefore, it is the job of talented media planners to ensure more than ever that budgets are efficiently invested into media that will deliver results. This is an opportunity for agencies to demonstrate their planning capabilities coupled with showing effective audience understanding that will help deliver the biggest return on investment.

In addition, to paraphrase Donald Rumsfield, there are quite a few ‘known knowns’ this year, with both Euro 2016 and the Rio Olympics providing media opportunities for brands and opportunities which are increasingly joined up and programmatic, with broadcast only being part of the media mix.

What is obvious to me is that with finite resources, the majority of our clients are asking that the investment in marketing and the evidence of the value it is driving has to be both clearer and stronger.

Better still – being an optimist – we are being asked to challenge what brands are measuring and how these metrics actually attribute to KPIs businesses hold – or should really care about. Let’s not start the year bemoaning a hardening of client budgets but see this as an opportunity to be as industrious and effective as we can be and ensure the fortunes of our clients improve in a time of change, uncertainty or adversity.

With George Osborne’s “cocktail of threats” ringing in our ears, it comes as no surprise marketing spend growth has slowed – but it is still growing and with plenty still optimistic.

As ever, marketers must ensure measurement and analysis is at the heart of their spend to ensure they get the best bang for their buck. And the agency landscape is changing to reflect this, with more and more agencies focusing on data science, although there remains plenty of activity still not using data science.

Data science can help us measure, evaluate, attribute and target, with varying degrees of accuracy and performance, dependent largely upon the skills of the data scientists. So we know quite a lot about what works and how people respond. The bigger question now is to ask why they respond the way they do and turn that into data that can inform our creative execution and deliver ever greater returns.

The sharp decline in sales promotions and the huge upward revision in internet marketing reveals a strong desire for highly personalised campaigns, and a rejection of the traditional hard-sell, or spray and pray approach that is reminiscent of more traditional media buying.

A quarter of marketers also forecast an increase in budget for 2016, defiantly rejecting predictions for a tough financial year, something that is likely to be supported by the rapid adoption of new marketing and advertising technology.

However, they will be under increased pressure to show a return on their martech ROI. In a 2014 CMO Council survey, less than half of marketers said the technology they were using was producing positive ROI. Something has to give, which is why you’ll see marketers make stronger efforts to eliminate martech redundancies – for example, by replacing traditional enterprise analytics with in-house solutions.

Success in this, however, will be dependent on the ability to pool and standardise data in order to make these technologies work together, enabling marketing silos to break down and universal customer profiles to become the new norm.

Whilst it’s a shame to see that spend on market research has decreased by 7.3 per cent, the results of this quarter’s IPA Bellwether report are not a total surprise. Globally, the market research industry has been struggling to achieve growth for over five years, which is reflective of the massive change that is happening in the industry. A recent GRIT report by US organisation, Greenbook, highlights that a large percentage of the industry agrees that by 2020, half of full service research agencies will be out of business.

Clearly, the market research industry needs to transform itself to maintain relevance. With the rise of digital, businesses have become more inter-connected and are able to communicate with each other much more quickly. Whilst digital has transformed how research companies collect the data that feeds the industry, stripping out costs and reporting lead times, there is still an issue in how best we connect buyers and suppliers.

Nowadays, more than ever, buyers and suppliers need to be able to connect in the most efficient manner, and digital holds the key to this. Speed has changed the face of the market research industry; trends are emerging more frequently, so buyers need to react more quickly. Brand and business challenges have also become more specific, so buyers need to be able to access specialists with the latest solutions. Digital platforms have transformed how other industries sell to new buyers, now the market research industry must follow suit.

In light of ongoing economic uncertainty, it’s understandable that executives were erring on the side of caution with marketing budgets again last quarter. Nevertheless, it’s disappointing to see a further decrease in market research investment; a fundamental component of the marketing mix. I suspect marketers are relying on digital as the ultimate measurable medium but, without consumer insight, these efforts run the risk of becoming entirely futile.

In an increasingly crowded FMCG market, it’s crucial for brands to create products that truly resonate with consumers. Sampling provides the ideal test bed for new products, getting them into the hands of consumers and drawing insightful feedback on what will ultimately influence purchasing decisions.

This traditional technique not only gives brands the insight needed to make more profitable marketing decisions going forward, it also drives awareness as consumers actively engage with the product and share their experiences on social channels.