IPA Bellwether: industry analysis
Thanks to “relentless” upward revisions in the internet category, UK marketing budgets have witnessed an overall growth rate, according to the latest IPA Bellwether report. However, although strengthened on the first quarter, budget growth overall remains modest. Here, experts share their views on the findings.
The modest budget growth is in many ways not surprising given the number of factors making the business climate more challenging this year: the recent soft economic performance, increases in inflation, difficulties in the retail sector and ongoing uncertainties around the outcomes of the Brexit process.
The risk is that this drives marketers towards short-term behaviours and tactics to try and protect their position, which may be reflected in the increased intent to invest in digital (skewed towards search), sales promotion and, in the next year, direct marketing.
The evidence is clear, that maintaining investment in long-term, media-driven brand-building ultimately drives the right kinds of business outcomes, and I’d urge brand owners to hold their nerve in the face of uncertainty and make sure their budget decisions reflect the right balance between short and long-term strategies.
With main media marketing budgets growing it’s encouraging to see that advertisers still have faith in traditional advertising mediums, even as they increase spend in digital channels. TV, for one, still holds its own as the driver of reach and brand fame – the record-breaking viewing figures for England’s game against Croatia are testament to that fact.
As screen-based activity continues to be fundamental to consumer behaviour – whether on TV or on a tablet – brands must ensure they are present throughout the consumer journey, at every touch point.
It’s surprising to see then, that mobile spend has decreased for the first time since Q3 2016, particularly as smartphones are now, more than ever, a key means of adding value to consumers lives at critical moments along the path to purchase.
Indeed, recent research we conducted revealed that Augmented Reality experiences, delivered through our phones, are likely to be a valuable asset to brands in the future, with key players like Snap and Facebook continuing to invest heavily in the technology.
As innovation in this space continues, we’ll see AR cease to be just a short-term stimulant used to ‘surprise and delight’ consumers, becoming an everyday utility tool instead.
Consequently, there will be increasing pressure on advertisers to push the boundaries of creativity and imagination in advertising, if they want to successfully compete for consumer attention.
Going forward then, the challenge for marketers will be to find the balance between more traditional marketing channels and the desire for digital innovation.
The successive growth in budgets over nine years suggests that brands still appreciate the value of marketing to their business, and an upward growth forecast is a positive sign given uncertainty relating to Brexit.
It’s also encouraging to see marketers making upward revisions in traditional media investment. For some brands, increasing spend in digital isn’t necessarily the right strategy and marketers should balance brand building media and sales activation.
The upward revision in promotional spend is not surprising given the current climate, but with concerns of rising costs in some sectors, brands should assess the risk of promotional strategies in order to protect profit margins and avoid erosion of brand equity.
Given challenging times ahead, marketing effectiveness will be critical for brands to make the most of their marketing investment and enable both short and long term business growth.
The fact that 30% of firms surveyed in the latest IPA Bellwether are forecasting a marked increase in spend on internet advertising shows that marketers really value the crucial role digital experiences play in helping them compete for customers in challenging markets.
Now they’re looking to organise their digital touchpoints for maximum relevance, impact and efficiency. GDPR worries appear to have caused a dip in DM spend among some firms, but we’re seeing enlightened clients taking the opportunity to reframe their relationships with their customers for the better, which is why the trend looking forward for DM spend is positive.
A modest rise in adspend mirrors what we’re seeing from clients; the industry is concerned about the influence of Brexit, but generally optimistic and continuing to see positive results. This is reflected in the cautious positivity of the IPA Bellwether’s upward revision of 2018 forecasts for growth.
While digital remains on its growth trajectory, matching the high of Q2 2017 at +22.7%, half of this growth is in typically acquisition driving channels of SEO/ search which indicates a return to the tried and tested in digital.
Advertisers are also planning more spend in broadcast channels, reflecting the importance of these channels in driving brand growth. Of course the World Cup and some of the bigger hitting programming such as Love Island will have helped to drive viewership and engagement in the year so far.
The winners in such uncertain times will be those brands who invest more substantially in understanding how to drive customer attention, in order to affect behavioural change and ride the storm of more challenging economic circumstances.