‘Rip up the rule book’: Industry reacts to latest IPA Bellwether

Celine Saturnino, chief commercial officer, Total Media

The report confirms a lot of what has been evidenced year to date with substantial investment reductions and cautious re-entry to the market. With many marketing teams facing multiple challenges around supply chain management, product development, resources and delivery – now is the time to rip up the rule book and focus on new approaches.

Through the Covid crisis we have seen long term changes to consumer behaviour across almost every category, from increases in online grocery shopping that are here to stay; the merging of work and home; investments into new hobbies and leisure, and so on.

Such substantial and long term shifts to consumer behaviour and mindsets create new opportunities for brands who can adapt and innovate – both advertisers and media owners. Advertisers now more than ever need to be agile and iterative in their approach. There is a huge requirement to focus on delivering enhanced end to end online customer experiences and creating a connection that goes beyond the transactional.

Whilst there have been many challenges across the industry that we are all weathering, we should also be excited by the innovation in new ways to reach and connect with consumers that we are already live in the market.

The V-shaped recession Martin Sorrell once predicted is looking less likely, as the industry settles into the ‘new norm’ of not only face masks and social distancing but also budget cuts.

For a full quarter now, marketing teams have been operating with reduced spend and confidence. But up against these challenges, marketers have also been resilient and agile; pivoting strategies to survive the prolonged slump we find ourselves in. As predicted last quarter, ecommerce, finance and digital subscriptions have been resilient categories, and they will likely fare the best in the months to come.

If ever there was a time for long-termism to have its shining moment, it is now. If we’re predicting a challenging year ahead for adspend, but with a recovery expected from 2021, then marketers need to be thinking more smartly about investments made today that will pay dividends when the industry returns to growth.

A first-party data strategy is a clear area for long-term investment. We’re seeing a number of clients put money behind joining up on- and offline data to not only have a complete picture of the customer journey, but also as a true indication of the return on their digital media spend so their activity is more efficient – critical in a time when spend and results are being scrutinised.

As an industry we’ve been reprimanded for our short-termism; in our tenures, and in our performance and attribution. So why not prove them and ourselves wrong? Paul Bainsfair is right in saying industry recovery hinges on the decisions – and investment – companies make now.

The key findings from this quarter’s Bellwether Report come as no surprise. Following the pandemic and subsequent lockdown restrictions, budgets have hit their lowest levels in 20 years.

While the ad industry will welcome the report’s suggestion of a recovery in 2021, our industry will also be concerned by the fact that the market still remains in a state of flux. COVID-19 still dominates our day to day lives and a second wave could cause further disruptions to the economy next year.

In the midst of uncertainty and cuts in ad budgets, marketers need to step up. Rather than holding out for things to get better next year, agencies must prove their worth now. This means listening to clients and producing problem-solving work that drives results and produces a positive impact.

While it may be difficult to convince brands to increase ad budgets during troubling economic times, marketers need to make the case for advertising. As shown in a Deutsche Bank report, which assessed businesses after the 2008 recession, those who continued to invest in marketing were more successful in weathering the storm than those who did not.

The latest IPA Bellwether Report illuminates the stark reality of COVID-19 on our economy in Q2, with 51.1% of respondents seeing a decline in main media advertising spend during the period.

What is really interesting is that despite such a steep downturn in Q2, the report points to some recovery with an estimated -11.3% reduction in ad spend for the whole year, proving the resilience of the industry and importance for brands to defend their share of voice.

The specific media choices of the panel over the past three months are perhaps unsurprising and reflective of the market and consumer behaviour. As the majority of people were staying at home, video and online prevailed as the most popular mediums throughout the quarter.

I have no doubt that this time will be talked about for years or even decades to come, not only about how quickly things can change but also how quickly brands and media owners can adapt. To quote a familiar adage, these really are unprecedented times, but we must continue to do everything we can to help and support our clients through them.

Harmony Murphy, head of advertising UK, eBay

Although budgets are reduced, and may remain lower than average over the next few months, brands need to continue investing in marketing if they’re to maintain brand equity in the long term. But, with purse strings so tight, marketers are naturally looking for ways to be resourceful and do more with less.

In the world of online advertising, it’s now more important than ever for every single impression to be a valuable one – and, as they get back on track, brands can’t afford to waste spend by serving ads to audiences that won’t be interested in them.

But to achieve this level of efficiency, brands need real-time, actionable data.

After all, while historical data can be a helpful research tool, at this time of change, human behaviour is more unpredictable than ever. It’s only with ‘fresh’ data insights at their fingertips that marketers will be able to ensure they’re approaching the right people, in the right place, with the right message – and not let their valuable ad spend go down the drain.

Luke Judge, UK and US CEO, Incubeta

Overall, there are no big surprises in the report; the impact on businesses was clear to see. It is important to recognise that not all sectors were impacted equally; some sectors were positively impacted, whilst others were quick to adapt their business models and accelerate what were already inevitable trends towards online commerce and experiences. This enormous change has also provided opportunity for some, and this will become more evident throughout the recovery phase.

Digital advertising stands out from the negative figures in the report. In particular, we can see that across many sectors (excluding travel, hospitality and events), digital has held strong, particularly search and paid social. Also, while online display has seen an overall 30% decline in the period vs the previous year, it has started to bounce back as nimble and entrepreneurial businesses take advantage of lower CPMs.

The acceleration of the movement toward CTV means that we are likely to see an increase in online video advertising quarter on quarter for the year ahead. I am particularly optimistic about Q4 and believe consumers will shop for gifts at a higher level than ever as we approach the festive season.

Brands must continue to stay relevant in the mind of the consumer. Building those direct relationships with customers based on 1st party data is vital, as well as engaging with them in a relevant, meaningful and cost-efficient way. Brands that will succeed will be those that find out what works – and amplify it. Maintaining the status quo is no longer a sustainable business model.

It is undeniable we are seeing significant pruning to marketing budgets, but simultaneously many brands are using this as a prompt to review their media operating model as well as what they in-house and in-source.

Digital channels were already becoming the dominant force in media and have proved most resilient – we expect to see more money move from areas like events, PR and print into digital as new consumer behaviours take hold and audience targeting capability evolves.

At CvE, we are also seeing an increased focus from brands taking this time to review their data, tech and programmatic strategies to minimise costs and bring more value in. This is a tough time for traditional agencies with legacy models, with the big 5 seeing their combined marcap down 25% YOY.

Things were already changing fast pre-COVID19, but out on the other side marketers will demand quality, speed and value – a trinity best delivered by independent agencies and new agency models that are engineered for agility and transparency. There is a lot more positivity around recovery and growth from the independent sector of the market so we expect to see two speeds of recovery.

Zooming out, it’s clear that our economic recovery will be slower than expected with May data already behind projections, but it’s important to also note there is significant growth in everything e-commerce, DTC and digital related. Therefore, businesses that can pivot quickest to this new normal, will benefit, whether they are a brand, agency or media owner.