Experts from Bloomberg, Mindshare UK, Sky Media, Times Newspapers, Impact Radius, MC&C, Jaywing, Total Media and Primesight give their thoughts on what the latest IPA Bellwether results mean for the media industry.
Tal Smoller, European media analyst, Bloomberg Intelligence
The marked increase in ‘main media’ advertising budgets revealed by the 1Q 2017 IPA Bellwether Report bodes well for traditional advertising mediums. It may in part reflect some early shifts in ad budget allocations towards tried and tested ad solutions, such as TV, as digital's effectiveness is increasingly called into question.
This may help TV lure new or returning advertisers in the near term, which accounted for 1.6% of total TV ad revenue in the U.K. last year, according to Nielsen data presented by Thinkbox.
Yet the ad outlook remains somewhat elusive amid the ongoing uncertainty, which may be prolonged by the upcoming elections. Though the relative resilience of the economy may have alleviated some concern over the extent of the expected slowdown in ad spending growth this year, the impact of higher inflation and weak wage increases could take a toll on household consumption growth this year.
Jo Lyall, managing director, Mindshare UK
The continued upward trajectory of marketing budgets are a strong sign of confidence for the UK advertising industry, especially when put into context with the growing uncertainty caused by Brexit and the snap general elections called by the Prime Minister on Tuesday.
Unsurprisingly, internet spend has bounced back from last quarter’s revision and picked up the highest recorded growth in just under four years (net balance: +16.9%, from Q4 2016’s +12.1%). Mobile-based advertising also shows how seriously brands are looking at dual screening opportunities and building multi-channel campaigns by recording its highest rise since it was introduced to the report last year.
With new innovations such as voice and the continued growth in programmatic media, digital platforms will continue to demand a greater share of overall budget. As an example, algorithm optimisation for voice is going to be an industry game changer and this quarter’s Bellwether report mirrors a lot of conversations we’re having with clients at the moment around how to invest their media spend.
Whilst traditional channels are still very much in the mix, more often than not, the best results are garnered from using digital in tandem with more traditional channels and the report reflects that.
Shaun Gregory, CEO, Exterion Media
It’s understandable that there is going to be market uncertainty and increased caution over the next few months, even more so given yesterday’s announcement. However, it’s encouraging to see the record run of growth to marketing budgets has been extended by four and a half years signalling strength in the market.
Despite the uncertainty around the economy, it’s clear from the report that the advertising industry is continuing to invest in digital, with internet, mobile and main media advertising recording strong increases in budgets. Media owners and agencies need to focus on their use of digital and data and demonstrate how they can deliver more impactful measurable and accountable campaigns for clients. Being able to deliver clear insightful results back to clients is more important than ever.
John Litster, managing director, Sky Media
The snap election announcement will inevitably bring a further degree of uncertainty to the market. However, at Sky Media we are encouraged to see that client confidence in the effectiveness of advertising remains undiminished, as witnessed by their upbeat mood with regards to future budgets in the latest Bellwether report.
The TV market has had a bumpy ride over recent months but we are heartened by the positive sentiment shared by many about the near future. A future in which TV is well placed to deliver long term brand building benefits in a transparent and safe advertising environment.
Chris Duncan, managing director, Times Newspapers Limited
Marketing budgets are a strong indication of confidence in the wider UK economy and it’s therefore particularly pleasing to see positive growth in the industry.
It’s expected to see some of the concerns voiced in this quarter’s report regarding inflation and whether this post-Brexit growth can be sustained, and this will now be further complicated by a surprise election.
From a Times and Sunday Times perspective, we continue to see strong consumer demand for quality news and opinion, both in print and in digital. We hope to see the benefits in our advertising businesses of providing brand safe environments and transparent third party measurement for advertisers.
Julia Smith, director of communications, Impact Radius
Despite high-profile concerns over programmatic transparency and the lingering uncertainty of Brexit, the online advertising industry continues to show positive growth. This latest report shows that brands continue to have faith in digital advertising, as shown by their spending commitments. This is of course something we welcome and aim to foster further by encouraging greater brand safety and transparency.
The continued growth of marketing budgets are largely underpinned by improving financial prospects. The growth of the ad sector is tied to Britain’s overall economic performance and political stability is closely tied to this. The Prime Minister’s call for a snap general election has already sent sterling surging, however, this is a very short-term economic indicator.
Pending the ensuing result of the election and of the ongoing Brexit negotiations, we’ll be in a better place to assess the longer-term health of the industry. However, if current trends to continue, things are looking promising.
Mark Jackson, managing director, MC&C
The results overall are really encouraging as marketing budgets continue to grow and adspend is forecast to increase. It might seem counterintuitive that marketing budgets are set to grow against a backdrop of uncertainty, but this is a sign that boardrooms are starting to properly value marketing as an engine of growth rather than a cost on the balance sheet - a welcome sign of the times as chief marketing officers become chief growth officers.
It’s also encouraging to see main media has had its best result in 3 years, as marketers direct their increased budget towards these channels. This, coupled with the fact that we don’t expect digital adspend to decrease anytime soon, is encouraging from a performance perspective as a cross channel approach is the most effective way for brands to maintain long term growth.
The increase in spend in main media can also can be attributed to a heightened awareness of ad placement, a consequence of a slew of negative headlines. With brand safety high on the agenda, we could see a return to more direct buying and a renewed focus on the content brands are being associated with.
Rob Shaw, UK and Australia CEO, Jaywing
It’s good to see spend increase again, especially as marketers respond to the rise of mobile and the opportunities afforded by more sophisticated search techniques that can capitalise on factors such as location and price sensitivity, alongside Google rewarding quality brands and mobile optimised sites.
While marketer confidence is still good, the apparent wider economic uncertainty will drive innovation in fields such as Artificial Intelligence (AI) as marketers grapple with the age old problem of delivering more from their budgets against a backdrop of increased complexity. The key for marketers in the age of AI will be ensuring they understand how to recognise what is current hot topic AI and what is hot air.
Developing this understanding will help them pitch their budgets for investment to ensure the applications, technologies and available data align to derive best value and meet their needs.
AI still has a long way to go but already has the potential to free marketers from the grind of managing the very many moving parts that occupy considerable resources in delivering optimal execution. This will bring significant opportunity to liberate their creative and critical thinking and get back to a more rounded view of marketing.
Celine Saturnino, chief commercial officer, Total Media
These stats are indicative of the confidence we have seen from our client base in spite of broader economic and political instability. We’ll be watching to see if this stands true in light of further uncertainty caused by the news of another general election.
It’s positive to see internet forecasts continue to rise, despite the recent challenges that the media industry has faced. This points to advertisers having a more advanced understanding of the role of digital, and their ability to measure its real business impact beyond the issues that have been so widely reported.
As people consume more content through their phone and online, we will continue to see digital spend increase, which should provide further confidence for the future growth of all channels not just ‘traditional’ digital channels. The success of digital advertising, in particular mobile advertising, is down to the fact that the consumer is in control - they can watch what they want when they want and its far harder for marketers to legitimately interrupt this experience.
Brands that understand the mindset of their audience, and crucially when they are receptive or not, will be the ones that continue to succeed. Additionally, our continued ability to measure and report on mobile spend is helping to support greater advertiser confidence in the role of mobile media.”
Matt Teeman, managing director, Primesight
It’s positive to see that despite the current changeable political climate, combined with ongoing debates around transparency and trust, marketing budgets continue to grow.
With traditional media advertising seeing the highest balance in just under three years, marketers should continue to look to premium mediums to protect their relationship with consumers; out of home is more powerful than ever before, due to its impact, relevance and creativity as a platform for brands looking to build awareness, whether that is through billboards or digital display. Innovation is at its heart, with continuing investment in digital infrastructure making 2017 a truly exciting year.
Mark Roy, founder and chairman, REaD Group
Considering market turbulence over the last two years, it is encouraging that the sector remains positive and strong. However, this should be no reason to become complacent; in fact the opposite should be true.
The digital sector looks certain to be dealt a devastating blow by the General Data Protection Regulation (GDPR) in May 2018, with consumer consent and privacy now being the first port of call for any communication strategy.
We have long argued that advertisers need to keep their marketing approach omni-channel in order to mitigate events such as this. Consumers have simply had enough of inbox-bombing and have now been given the legislative opportunity to say ‘stop!’ And marketers will, in their droves.
Consumer centricity will be the way forward for the next decade, giving consumers what they want, when they want it and how. The increase in direct marketing budgets is the start of this and it is great to see companies waking up to the more personal opportunities that the channel presents for advertisers.
Of course, looking forward right now is a bit like looking for a light at the end of the tunnel. We are faced with Brexit, Trump, a possible ‘Frexit’ and of course now a general election here. Advertisers need to stay focused on what works and what will continue to work. I suggest we will see an increased focus on retention and a return to a lower volume/higher frequency world. Lifetime value will be every marketer’s mantra as margins continue to be squeezed by new market disruptors.
The future looks rosy, but by no means easy.
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