Good news on ad budgets — but they have to go much further
Opinion
Marketers’ willingness to maintain adspend is to be applauded, but media agencies must now create extra value, deliver great service and innovate to make spend stretch further.
Everyone in the advertising industry will have been pleased to learn from the recent Q4 Bellwether Report that marketing budgets are showing the strongest levels of growth in decade.
And some of the associated remarks made by industry commentators about the importance of maintaining advertising spend during a downturn are more resonant than ever.
The IPA’s Paul Bainsfair talked of companies continuing to advertise through tough times to maintain brand loyalty. Another commentator noted brands “demonstrating the foresight to maintain a long-term view towards their brands” can stave off competition.
I would totally endorse these views. However, I would argue that the Bellwether Report gives a somewhat incomplete picture of the overall UK market. The sentiment around budgets masks the reality for many SME and regional advertisers — the heartbeat of UK adspend. It’s not business as usual.
Editor’s column: Advertising and media are no longer ‘bellwether’ sectors
While many advertisers are holding or increasing spend, they are looking to get a lot more for their money than ever before.
In a tough economy, marketing spending is nearly always seen as the “low hanging fruit” in terms of cost reduction. So, for many marketers, maintaining or increasing spend is a valiant battle and they understandably want that budget to go further once it’s secured. There’s now far more focus on short-term results and this in turn puts greater pressure on media performance evaluation over shorter periods.
Chief financial officers and other advertiser stakeholders like digital media because of its competitive pricing and big audience numbers. But most marketers understand the value of brand awareness, so agencies are using the latest attention metrics to justify spend on longer-term media such as broadcast.
Media agencies — particularly those in the independent heartland — are seeing a commitment to marketing spend, but on the clear understanding that they focus on three critical areas.
Ensuring value for money in a tough market
The first of these is value. Delivering value for money is a staple for media agencies, but the current focus on creating extra value is real.
Value can cover many areas, from bespoke research to investment in technology — particularly in the attribution space — and much of this is focused on maximising media performance.
Advertisers are increasingly leaning on their media agencies for technical advice on ecommerce and CRM systems, and agencies have become a vital part of many marketing departments’ professional development by providing training sessions, particularly on technology and new areas of digital measurement.
But the core role of “value” is to make spend work harder. And, clearly, this is where smart media thinking and action win out. Media is now about a deep understanding of business priorities, robust data capture and analysis, and creating and maintaining a seamless customer journey.
Media agencies are now heavily focused on the client’s “back end” to ensure all leads are captured and conversions are maximised.
Tech and data solutions are employed throughout to ensure they squeeze every last drop of return on investment. And this is combined with a good old-fashioned approach to getting the best deals with media owners.
Delivering great service in the real world
The second area of focus is service. All agencies like to say they go above and beyond the call of duty, but actually doing this in practice can be challenging.
The agency silos created by digitisation have had a real impact on service and I would agree with Steve Taylor’s recent comments about the need for more generalists. One size does not fit all and media agencies have to structure planning and buying for the real-world needs of clients.
Media agencies like to talk about agility, flexibility and “always on” when it comes to service. But, again, too many agencies’ structures and ways of working do not facilitate this. Some of the international agencies have rightly created dedicated teams for their largest clients, so they can be agile and flexible. But what about the rest? Smaller agencies can’t compete with the scale and clout of the networks, but they can often win on service delivery.
Making spend work harder through innovation
Thirdly, there is an ongoing need for innovation — arguably the fuel for value and service. Much of this is driven by technology and all of it is about a relentless marketer focus on effectiveness and efficiency.
Recent advancements in AI are really helping advertisers — particularly SMEs — get more from their budgets. Generative AI is making dynamic asset and creative production easier and more affordable, and AI-based innovations in adtech are helping to improve targeting and optimisation. As media agencies, it’s our role to deliver these solutions.
And it’s not just about agencies facilitating new platforms; innovation is just as much about making existing media work better. Attention metrics and technology are helping to show the true value of TV, dynamic creative solutions are making connected TV advertising a more personalised experience and addressable technology is being used to improve targeting and attribution in direct mail.
Marketers rightly expect media agencies to stay on top of the latest innovations to ensure budgets are being used to best effect.
The steadfast attitude of advertisers in maintainining and increasing marketing budgets in the face of harsh economic conditions is to be applauded. More than ever, marketers are prepared to ride out the bumps to put themselves in a strong position for when the market picks up.
But this commitment to adspend is dependent on getting far more for their money. Marketers are placing significant expectations on value, service and innovation — and media agencies must step up to meet these.
David Price is managing director of The Grove Media