IPA Bellwether: industry analysis

The latest Bellwether report shows evidence of a renewed sense of opportunity among marketers – coming despite, rather than because of, improved economic confidence.

By that, I mean there is no sense of ‘a rising tide lifting all boats’. Rather, brands are looking for ways to ride choppy waters after many quarters of floating and waiting.

This means, of course, that they will need to spend smarter, not just higher, by finding growth in unfamiliar places, and focusing on making effective investments that drive real growth, rather than just temporary efficiency.

The most important thing is for brands to think for themselves and don’t just copy what everyone else is doing. Effective growth will only come from understanding what works to recruit valuable customers and improve their journeys. As such, the right balance of media, creative and technology investment to drive growth will vary for every business.

It’s disappointing to see that market research investment in 2020 is on the decline given the vital role it plays in driving effectiveness across all areas of marketing.

Increasingly, brands are focusing on how to drive long term effectiveness. Market research, as the gateway to understanding people’s underlying motivations, is critical to achieving this.

Data might be able to show us the decisions people are making, but we’ll get nowhere if we can’t understand it, which is why using a cross section of high quality market research resources to draw conclusions is vital.

With main media advertising on the rise, and internet continuing to perform highly, there is much to be optimistic about for the Out-of-Home (OOH) sector. OOH sits at the “sweet spot” between these two mediums through its ability to reach and mobilise audiences at scale (acknowledged as a vital attribute for brand-building), as well as delivering against shorter-term business objectives through the utilisation of data-driven and automated methods similar to online marketing.

OOH’s strength as a public and inherently safe and trusted channel is appealing to brands in the current landscape. But OOH also continues to innovate, thanks to investment in site locations, smarter data, near real time trading, and dynamic creative.

OOH’s fast-growing role as the connector between physical and digital media channels makes us highly optimistic for further growth in 2020.

The results this quarter further highlight the industry trend of becoming more digital and data centric. However, if this continues there’s a risk that it drives a short-term focus on ‘cause and effect’ marketing. We predict that this is going to reach an end, as people will start to think about what drives long-term value for brands.

Investment in developing strong data structures is important, but this should not be the solution; instead we should look at how to use data both efficiently and effectively.

By consolidating, integrating and activating data across multiple touch points, marketers will soon be on the path to a strong people-based marketing approach. So rather than thinking of data just as a means to an end in the short term, this approach will ensure the industry will become more balanced.

And with the report showing a slight uplift in traditional media, it’s clear that marketers are starting to prioritise long-term thinking – this will not only enable brands to react to current trends in the surrounding environment, but also contribute to developing a solid and successful plan for driving lifelong brand fame.

This quarter’s IPA Bellwether report shows that marketing budgets are increasing for the first time since Q1 2019, despite the ONS finding this week that GDP fell by 0.3% in November. The report indicates that marketers are taking the advice of their agency partners and recognising that brands that invest in marketing during difficult economic times are those that succeed.

However, the future isn’t all positive and the industry isn’t out of the woods just yet. While the ad industry will undoubtedly welcome the return to growth in budgets, and hope that the touted “Boris Bounce” emerges, there is a long way to go on trade negotiations, which will mean continued uncertainty.

To ensure continuing budget increases, agencies must prove themselves to their clients. This means building trust by focusing outcomes. Work that builds brands, has creativity at its heart, and drives business value for clients as its goal, both now and long term.

The positive upturn in this quarter’s Bellwether report is a demonstration of the impact that confidence has on behaviour.

There is a wealth of research that demonstrates that short-termism has a negative impact on business performance, and that the best way to combat tough economic conditions is to increase marketing expenditure. So in theory, marketing budgets should have increased in 2019. However, marketers are first and foremost humans, meaning their decisions are heavily influenced by market confidence and the emotional response to this, rather than purely rational academic evidence.

In times of uncertainty, we put plans on hold to avoid disruption and mitigate risk, preferring to stick to the status quo – which is what we saw in much of 2019, as we waited for a more stable political landscape. We like to make plans for a future we can reasonably predict, so now that we have that certainty, confidence has returned, at least in the short-term. The strengthened position of the pound has increased market optimism and restored confidence in consumer spending, hence the upturn in marketing budgets.

However, despite current confidence and growth, we should anticipate another downturn towards the end of 2020, if it becomes clear that the Brexit negotiations will be negative for the economy.

In the latest IPA Bellwether report released today, it reports a renewed sense of optimism from Marketers going forward. With more companies experiencing budget growth than budget cuts in the 4th Quarter it seems as though we have started to turn a corner. Many clients released late money in Q4 to bolster their push for Christmas. TV for example recovered from early forecasts to only be down -0.9% year on year versus the whole year being down 1.9%.

As ever, when looking at where Marketers feel like their budgets will increase, the internet stands out with an additional 7.9% of companies reporting that they have had an upwards revision in this area. The internet obviously covers many media, and part of this growth will be down to media owners digitising their estate and their content.

With more certainty in the economy and some big sporting events coming up in 2020 such as the Euro’s and Olympics, there is every reason for cautious optimism.

These latest results signal a recovery of confidence, now that the election is done and Brexit feels more certain to happen.

With the turbulence of 2019 behind us, we can see businesses getting back on the front foot and unlocking marketing budgets. Keeping audience at the heart of everything we do remains key, of course. To encourage consumer confidence, we need to show people we understand their needs, desires and concerns better than ever during 2020. How Brexit affects the country – emotionally and economically – remains difficult to accurately predict.

I believe, too, that people’s concerns about the climate crisis conversation are likely to heighten as words turn more into action. We all need to work out how we can help businesses develop a point of view on their role in those discussions. Lots to think about as we move through what I’m confident will be a challenging but fruitful year for UK businesses.