IPA Bellwether: Industry reaction

It’s encouraging to see an uplift in UK marketing budgets after a slowing down of growth in Q4 2018. Significantly, we’re seeing this growth across the board and the tension between driving short and long term results remain. The first signals of a better balance between brand and demand media is starting to show and is more in line with Binet’s 60:40 brand vs activation. More importantly, brand and demand channels are becoming more united in their activations.

In particular, we’re seeing increased interest in mobile as a channel, as it reports its strongest growth in spend since Q4 2017. It is now a predominant digital channel and should be driving both media and creative decisions. Mobile offers advertisers the ability to be much more agile with their creative, whilst simultaneously localising messaging and driving more direct ROI. Indeed, this agility was something we leveraged in our media plan for Nike’s award-winning LDNR campaign, working with partners such as Snap to reach our audience where they were.

By placing the audience at the heart of media planning, marketers will connect with the right consumer at the right time and ensure the development of long-term brand awareness, which is increasingly important given the current UK economic climate.

This Bellwether report is a boost to UK advertising as marketing budgets have increased. It’s welcome to see that advertisers remain confident in the role of Search as key to reaching the right customers at the right moment. It’s also really encouraging to see the boost to mass media, which we have always maintained is important to support long term brand building.

Perhaps this later shift in particular signals that British business is beginning to feel at best more confident in the future. So continued investment remains crucial even within uncertain climates – perhaps even more so.

The key findings from this quarter’s Bellwether Report are no surprise. Following inconclusive Brexit negotiations, marketers’ confidence levels remain significantly negative. While the ad industry will welcome the return of growth in marketing budgets, the sector will also be concerned by the fact that 2019/20 budget forecasts are at their most subdued since 2009.

With marketing often being the first budget cut by brands during troubling economic times, it is clear that creative agencies now more than ever need to prove their worth. We can and should be doing this by truly listening to our clients and unfailingly producing problem solving creative work that drives results, does good, stands out and makes an impact.

We need to ensure that we are always prioritising trust between ourselves and our clients by starting from a point of truth and doing what’s right for the brand – not suggesting ideas for their own sake. Only through creating steadfast relationships with our clients can we as creative marketing agencies ride the storm of economic uncertainty.

It is reassuring that marketing budgets appear to be increasing as of Q1 2019 versus the lack of growth at the end of last year. However, it would not be unreasonable to assume that we could see this shift again when we review these figures after another quarter passes and businesses progress through their financial calendar.

Uncertainty as the new normal is a constant theme of recent years. Because of this, what matters to our clients is agility from their agency partners and the form of this will vary. We create additional investment plans as a standby for some clients in anticipation of additional funding coming into marketing at the end of their financial year. Other businesses have budget ring-fenced that can be cut if needed. The sharp increase we have seen between Q4 2018’s flat-lining compared to this latest report indicate we can see quite significant shifts over a relatively short time. Many agencies talk about agility but as an industry we need to truly embrace this to service clients in this time of uncertainty.

Despite the financial challenges that many businesses are seeing, it is also important to maintain a focus on effectiveness as well as efficiency. Only by demonstrating both the long and short term impact of our marketing efforts will we be able to help protect investment.

It might come as a surprise that main media advertising budgets have rebounded from the sharp reduction recorded last quarter, given the uncertain economic climate. However, this shows that it’s clear marketers are committed to long-term multi-channel communications.

Growth in Out-of-Home (OOH) revenues suggests it’s clear that opportunity lies ahead for OOH. OOH posters and screens are perfectly primed as effectively the new ‘shop windows’ for brands, offering both the brand fame and sales activation that marketers are after.

The report further showed an increase in mobile advertising, which is promising for the OOH industry too, as it continues to develop more sophisticated ways of targeting audiences by time and location using mobile augmented data, with surging mobile commerce figures evidencing the new consumer behaviours.

This report provides welcome optimism to marketers and the wider industry. It’s particularly pleasing to see increases in the key areas our business operates in, internet advertising and main media, including print. Although there is an understandable sense of caution, it’s reassuring that brands continue to show a trust in traditional media.

Smart money is still going into building reputation in a brand safe environment, which will protect business growth as the rest of the year plays out politically. Newsbrands are a key part of this media mix, demonstrating continued product innovation, as well as a crucial trusted relationship with audiences.

Despite uncertainty in the market, it’s encouraging that marketing budgets remain resilient, with significant growth recorded in the first quarter of 2019 across both internet and main media budgets.

As in previous quarters, internet advertising is leading the charge. In particular, the report highlights increased spend on search/SEO in order to maximise performance and media efficency . This indicates that in an increasingly competitive and uncertain market, brands are rightly investing in meeting their customer at the most contextually relevant point in their path-to-purchase.

However, investment alone is not enough – no matter how many channels you include in your marketing plan. Brands must ensure that they prioritise an attributed people-based marketing approach, focusing on relevancy over reach. This will mean winning, retaining and growing their best customers while providing an improved experience and insulating their business from any business downturn.

Though we remain in the midst of Brexit uncertainty, the surprising growth in marketing budgets is a confidence-boosting sign from businesses that advertising and brand-building campaigns continue to be at the top of the agenda. In particular, it is encouraging to see that main media advertising, which includes cinema, is on the rise, with a healthy growth rate of +5.2%, and is expected to increase throughout the year.

Though changing consumer habits mean internet spend is a popular focus for marketers, it’s clear that many recognise the value in main media outlets for promoting big-ticket campaigns which can have significant impact. 2019 is already proving to be such a bumper year for film, and with year-to-date cinema admissions the best since 2011, we’re looking forward to seeing how the rest of the year plays out.