IPA Bellwether: industry reaction

Fran Cowan, VP marketing, International Advertising Association, UK

Understandably, this report presents a negative picture of the industry, the data was gathered at a time when events were still unfolding and we don’t expect to see the full effects of the situation until this quarter.

The causes of this downturn come from unprecedented global circumstances, yet we can apply learnings from previous times of economic crisis, and know companies that maintain some marketing efforts will most likely reap the rewards and rebound quicker.

However, it’s important to do this in a controlled way. Now is the time to carefully consider where marketing budget is best spent, to look after employees, partners and suppliers as well as protect brand images. Luckily in the UK, we have an industry that pulls together during these times. We’ve already seen some great collaborative thinking and initiatives that support the notion of ‘advertising for good’.

It’s hardly surprising that marketing budgets have taken a significant downturn as businesses’ immediate focus is to protect cashflow. One of the biggest challenges for marketers right now is adapting to dramatically new consumer buying patterns which differ radically by category.

We all know that brands which are able to still invest during a downturn have often been proven to bounce back stronger, however these are unprecedented times. That said, I believe all brands need to retain a consistent connection with consumers which is honest, authentic and meaningful.

John West is no different – despite all of the challenges today, we’re still totally focused on supportive engagement with our consumers.

People will talk of a rebound, or a bounce. Someone will predict the COVID Catapult! Some brands will flourish, especially in the Value end of the market. But generally even the eternally optimistic advertising industry agrees that things are going to be very, very tough.

This will cause an inevitable major reset in our industry. Both rightsizing and re-organisation. Marketers will review their rosters and consider the number and nature of their external agency partners. Also more tasks will be taken in-house, or into an embedded model.

Agencies who demonstrate a broad communications understanding, and offer integrated multi-disciplinary expertise will become more attractive for marketers striving to maximise both effectiveness and efficiency.

However, we also know that some agencies will become increasingly desperate for volume and will work for uneconomic and unsustainable remuneration.

Therefore, more than ever before the marketing services industry needs to remember two things: the importance of our Product and the value of our Service.

We change behaviour. We improve business outcomes, and in many cases we add value far beyond our core communications scope.

So please, please, please, let’s not forget that and throw away our young colleagues’ future in the face of short-term economic pressure.

Philippa Snare, SVP EMEA, The Trade Desk

In times of uncertainty, it can be tempting for brands to reduce advertising budgets and be more cautious. But, right now, consumers are particularly hungry for any information, reassurance or even consistency that brands can offer. Marketers are used to being agile and great marketers are prepared to pivot their approach – as what was appropriate three months ago likely won’t be now.

It’s all about focusing on long-term growth over short-term ROI. Brands that cut spend because they don’t see it delivering instant impact will reduce their share of voice. This means those that continue to spend will find their share of voice automatically goes up – and market share will follow. Audiences are bigger than ever right now because people are consuming more media – providing ample opportunity for brands to create long-lasting connections that will drive sales when consumers are ready to spend again.

Rather than a kneejerk budget cut, I urge marketers to take the lead and help consumer confidence recover now by still communicating with them. It might feel counterintuitive, but brands with strong purpose are part of helping the economy get back to growth and people and business will be thankful.

Kevin O’Farrell, associate vice president, Analytic Partners

As the IPA Bellwether report demonstrates, we are starting to see the immediate impact of Covid-19 on the marketing industry. Budgets are declining at the fastest rate since the global financial crisis, but the key takeaway for brand survival is to adapt in the short term and invest in the long.

Evidence has consistently shown that the brands who hold their nerve and continue to invest will be the ones that not only survive but prosper during the incoming economic upset. In over 100 cases, more than half of brands saw improvements in ROI during the last recession. But it is not about continuing with “business as usual”. Brands need to use a data-led approach to adjust their messaging and channels to answer consumer needs in this new-normal.

Historically, in marketing mix modelling, we have been used to relying on yearly, bi-annually and, at best, quarterly data to determine the effectiveness of a campaign. Now, thanks to Covid-19,the evolution of real-time data modelling has been expedited and brands are able to find out in a matter of weeks whether a campaign is working. This, coupled with detailed scenario planning, means brands that invest in marketing spend during the crisis have more certainty on the effectiveness of their campaigns now and are in the best position to think strategically for the future.

Nick Pugh, managing director – UK & Ireland, Ebiquity

This confirms what we already knew: these are uncharted waters. For brands that are able to adapt, we recommend holding your nerve and advertising where possible for the best long-term results. Share of voice drives share of market, and brands that continue to invest in recessions usually come out stronger.

It’s also clear that citizens are turning to brands for advice, guidance, reassurance, and help. The fast pace of this crisis, combined with the economic impact, means that brands need to shift to super fast planning and forecasting cycles, real time insights and analytics, and evidence-based measurement.

Brands should be laser focused on the metrics that matter in order to properly substantiate investment decisions up to the C-suite and Board level.

Alistair MacCallum, CEO, Kinetic

The latest IPA Bellwether Report is a story of short-term pessimism and reasons for longer-term cautious optimism.

We’ve become used to celebrating OOH’s growth and innovation. However, in these unprecedented circumstances advertisers have understandably paused short term plans, most commonly through deferments, and this will see revenues decline in 2020.

Despite the market conditions, OOH has been very much front and centre, reacting to this situation with speed and agility and demonstrating the power of OOH to get mass communications out to audiences immediately and publicly. Post lockdown, the contextual and dynamic creativity seen on OOH (often shared at scale via social channels) will be positively remembered. OOH’s role as a canvas to champion key workers; to urge people to stay indoors; for public information messaging; for community initiatives; for smart and brave campaigns from brands such as Paddy Power, Tesco and some SMEs; and to adapt to changing behaviours with real-time information, has highlighted the flexibility and power of the medium. Even with fewer people physically out of home, we’ve still been able to reach audiences – and put a few smiles on faces during difficult times.

As we move towards what will likely be a staggered lifting of restrictions, smart deployment of digital OOH means brands and advertisers can move quickly to reach audiences across location and context to communicate that they are open for business, and to capitalise on pent-up demand. As the country starts to return to some sense of normality, I believe we will soon move back towards the upward trajectory that we have seen in recent years, as the public rediscover the joy of being out of home.

This quarter’s Bellwether results are hardly surprising, and whilst they paint a dark picture right now, we should choose to focus on the positives. Is there optimism for recovery? Definitely.

Many of our clients across sectors have been able to use this time to invest in their content strategy, organic optimisation, audience segmentation and digital measurement. Once we’re out of lockdown, they should have renewed confidence in their digital strategy.

Those businesses that have retained staff and maintained operations should be able to increase spend quickly; they will most likely be in more resilient categories like eCommerce, finance and digital services, for example.

Continued uncertainty will mean channel-neutral planning will really come to the fore, helping marketing teams to quickly move budget into channels that are performing well and which fit into changes in peoples’ daily lives – including news channels and environments, social, mobile gaming and VOD.

And what about once we’re into recovery? Brands may be tempted to make up for lost revenue by pushing more spend into direct response – and some brands, like gyms, might want to start to monetise the digital content that they gave away for free during lockdown. Brand marketing is expensive, and many companies may not be able to shoulder the increased short-term investment. That said, with many businesses going into administration, there may be market share to capture if companies can afford to be bold. If they’re smart as well, they can attempt to tap into changes in consumer behaviour and preference to build relevance and positive sentiment.