Bellwether Report: industry reaction

This quarter’s Bellwether report is far more positive than a lot of brands and agencies would expect given the current economy climate. Such a small predicted drop in ad spend of 0.3% against a 2.7% inflation rate in a time of ongoing economic pressure is actually something the industry should look upon as encouraging.

Clearly clients are still investing, and investment in many areas is growing: a trend that looks to persist. The key to continued success in the media landscape is measurement: being able to track results and prove the ROI you are delivering. This is especially vital with growing or challenger brands, where this it is vital that the board can see the benefits if they are to reinvest.

The fact that ‘the internet’ is still growing rapidly at +8.9% is testament to this. Through measurement tools and the correct insight, applied intelligently, marketing results can be directly attributed to campaigns that spread across mobile, video and social media.

The overall market seems buoyant at the moment, with marketing budgets not just coming from the CMOs but also the CFOs and FDs as we move to a more programmatic purchasing approach.

Today’s Bellwether report highlights the requirements for agencies to develop diverse product and services bases for their clients, traditional recessionary stalwarts such as DM experienced decline (3.6%) in favour of softer PR (up 1.8%) and market research tactics (up 1.3%). As agencies we need to be able to move with the service trends to maximise the return for our clients.

The increase in these softer measures reinforce the report’s more optimistic forecasts for 2014; we are seeing more clients testing more varied communication mixes than ever before. It is unsurprising we are seeing the internet category delivering 8.9% increase.

Our clients’ tests are often in the broader digital space, focusing on brand, mobile and connected devices. I am surprised that we are seeing a decline in Search and SEO as it’s an area of focus for many clients as they are becoming increasingly sophisticated in their content, owned and earned strategies.

I believe that we will see further budget increases in SEO, PR and Social media as marketers develop a deeper understanding of Generation C* and how they will help businesses connect their content with the consumers. This change will further diversify the communication mix.

*referenced from Brian Solis’ Changing the Way Businesses Create Experiences

In the current environment of economic uncertainty, marketers are, unsurprisingly, continuing to invest in marketing channels which generate trackable returns, and the latest IPA Bellwether report reflects the growing understanding within the advertising industry that it’s not just search that delivers on ROI.

Increasingly advertisers are seeing the impact that a cleverly executed, targeted and engaging display campaign can have on their brands, and we can see this reflected in the relative lack of growth in search and SEO spend. Coupled with this is the growing sophistication of tracking and measurement tools for display advertising which allow advertisers to prove the value of dynamic online campaigns over direct response campaigns.

If marketers are going to gain cut through with consumers in yet another challenging and uncertain year it’s crucial that they understand the mood of their consumer. As purse strings tighten the perception of what is valuable shifts from ‘things’ to ‘human connections’ and it will be those brands that use flexible online channels, that offer them the ability to talk to their audience in a personal way and build a valuable relationship, that will succeed.

Optimism is the order of the day. As precedent shows time and time again, those that invest in a downturn are those that come out the other side in the best of health. The onus is on us marketers to work more collaboratively alongside clients, demonstrating a rich, rigorous and robust understanding of consumers in order to create the most effective campaigns, regardless of channel.

Naturally, it is more difficult to persuade anyone to invest in brand equity and communications when feeling so financially vulnerable, but the real danger is sacrifice brand investment in favour of a short term promotional boost. It only further pushes consumers towards purchase decisions that rely solely on price.

The challenge for 2013 is delivering the right creativity and the right content in the right context; taking into consideration the constantly shifting consumer mindset. Value is no longer solely rooted in price, instead it’s in convenience, service and the experience, reflected by our constantly evolving media consumption habits and shopping behaviours.

Using data analytics, strategic planning and predictive modelling to map out the various motivators and influencers along the purchase decision journey, it’s through this sophisticated level of insight we can deliver focused creativity, higher engagement and true cut-through at a time where consumers are crying out for relevant engagement.

The shifts in spend continues to reflect the ever-present client concern of measurability. But ultimately, clients are under enough pressure of their own to protect their own budgets in an economic downturn and it’s our role to work with them to identify the value proposition within the market, and drive that forward together.

It’s no surprise to see ad spend predicted to dip in 2013, only to rise again triumphantly in 2014. It’s well documented the lack of activity for the nation to get excited about this summer, and the continuing industry pessimism clearly reflects the cautious approach marketers have.

Looking to the future, marketers need to heed the lessons of the year past. While the summer of 2012 represented a wonderfully unique period, in which Britain was able to shine at its very brightest, to view it as an anomaly would be foolish.

The ’empty’ year we face ahead in 2013 is an issue on the lips of many, but the solution already lies in front of us – the power of face-to-face human interaction. What characterised the London Olympics wasn’t just the remarkable success of our athletes, but how the whole occasion was brought to life by the huge army of volunteers and their unrelenting, inspirational and uplifting enthusiasm.

Just because there’s no major global sporting event or Jubilee to highlight the summer ahead, it doesn’t mean marketers should immediately cast aside what is an incredibly power and valuable marketing tool. In austere times consumers do want value, but most of all they want relevant, engaging experiences.

Of course, the uncertainty of the economy (and welfare in general) is having an effect on consumer shopping habits and behaviours; and I imagine this is being acknowledged by brands when budgeting to some extent. While 2013 requires brands to be brave, the brave will win if they get the message right. With no distractions ahead, what better time to surprise and delight?

The report is a largely accurate reflection of the industry right now. Cautious confidence within our sector, but we’re still wary of the challenges posed by an uncertain economic future. Clients are under large pressure to ensure their budgets stretch further, and that return on investment is both quick and sizeable.

This latest Bellwether report further reflects the extent to which the traditional agency/media model is rapidly changing (and that’s a forced change driven by clients). With social customer engagement and one-to-one marketing required, agencies will be looked upon to provide the resource to manage multiple communication streams and marketing programmes.

Therefore, we as marketers need to be working more closely than ever with clients, providing a mix of strategy, consultancy, creativity, data-driven insight and communicative solutions, delivered seamlessly and efficiently.

With the growth of digital and now mobile, it’s becoming harder to differentiate where budgets are being proportioned. Those who will prosper in the industry will be the ones who can best meet the needs of clients – and that need is a truly integrated proposition that delivers value by way of joining up the various channels seamlessly, rather than just delivering within a silo.

As we transition from an emphasis on multichannel to omni channel, the ability to maintain a consistent, high-quality level of service and support across all these areas will be of the most value.

The fluctuations in spend across the various disciplines reflect one key issue: that clients want more measureable campaigns. Those disciplines where ROI may be harder to justify, or ones that aren’t in vogue, are naturally going to struggle to justify significant portions of the financial pie.

The most important development for the industry right now is the transition from multichannel to omni-channel. Mere presence across different channels is no longer enough, rather it’s how brands connect those channels together to form a consistent experience regardless of touch point; and getting that right is all about showing you truly understand each customer, personalising their experience according to those nuances of individual understanding.

Consumers don’t care about channel; therefore neither should the brands, nor the agencies. In austere times, marketing ROI can be fuelled by ensuring consistency of messages and interactions at every touch point of a consumer’s brand journey; making brands feel human, customers feel special and relationships mutually beneficial.

The Bellwether summary is desperate for us to see positive signs in the Q1 report. Marginal increases in PR and research, and another shift upwards in the inadequate catch-all term ‘Internet’. And although there’s an increase in the perception of Company prospects, this is balanced by a negative outlook for the industry that they sit in.

All in all the figures show a spiral of decline in overall spend that has lasted since 2008, in line with the economy that the report famously pegs.

However, from an agency perspective things don’t feel that gloomy. We’ve all learned to become leaner, more efficient and use techniques that deliver better ROI for our clients. Maybe those clients are spending less overall because we are helping them spend more wisely? Drive awareness through earned rather than bought media, use promotions tactically rather than routinely, concentrate on profitability of existing customers rather than acquisition at all costs.

And the outlook going forward? The report shows an expected rise in spend from the highest percentage of respondents for 2 years; and we do feel that positivity in the market. Even client in sectors that have been under the biggest stress, like Retail and Financial Services, have started to report improved figures. This will be partly due to intelligent investment in marketing services, and should translate into continued spend to help them build further success in 2013/2014.