‘Disappointed, but optimistic’: Industry reacts to IPA Bellwether

David Mulrenan, head of investment, Zenith

The percentage of companies saying they are revising their budgets down has improved from 51% to 41%. Main media has fared better than most parts of the marketing mix with only 25% of companies saying they are revising their budgets downward.

Whilst uncertainty over Covid-19 and Brexit still looms as we go into Q4, there is a cause for some optimism at the time of writing this (standard caveat at the moment!). TV is still a good indicator for the health of the advertising market in general and Q4 looks to be up year on year with a lot of late money coming into the market. As consumers adapt their Christmas plans, so advertisers are adapting how to reach them. Hopefully this can be maintained as we go into the new year.

Shazia Ginai, UK CEO, Neuro-Insight

It is disappointing – although not unexpected – to see further drastic reductions to marketing budgets.

Our research shows that in this emotional time, people are looking to brands to help them understand and frame this difficult experience. As Covid-19 has brought sharp focus to the more fundamental foundations of Maslow’s Hierarchy of Needs such as shelter and safety, customers are likely to be less aware of peripheral brands and brand activity and focus instead on brands that bring either utility or enhanced experiences to their lives. So, there’s a clear opportunity to build more fundamental connections with customers for those that get it right.

Additionally, now more than ever, as we face existential threats, people expect brands to weigh in on key issues that affect the world we live in. Brand Purpose may have been loosely tolerated when things were going well in consumers’ lives, but brands need to put their money where their mouth (or brain) is if they’re promising action, or they won’t be easily forgive and may be easily forgotten.

It’s heartening that the report predicts a more optimistic outlook for 2021 but for brands, this will only be possible if they can manage – even in these difficult business conditions – to connect to the hearts and minds of their customers. Brands will be remembered if they get it right, and it will position them well on the way to getting back to growth in 2020/1.”

Azlan Raj, chief marketing officer EMEA, Merkle

The record reduction in budgets, and recurrent Covid-19 lockdown restrictions have left the industry low on both confidence and optimism. Just three in 10 of respondents are feeling more optimistic about their own companies’ financial prospects than in Q2, and there’s a very real risk that low confidence could itself become a self-fulfilling prophecy of stagnant growth or further retrenched budgets.

The green shoots may not feel ‘immediate’, but there are opportunities to get ahead of the curve and back to growth. As we try and get back to normal, consumers are still very much unsettled by what’s going on in the world, and not just Covid-19, but the US election and Brexit too. Brands that can truly support their customers to navigate safely through the stormy waters of 2020, have much to gain.

So, we’d expect to see a shift in ‘pay and spray’ approaches to advertising, and a greater investment in digital, data and customer experience. The number of touchpoints is still growing, as what customers consider ‘ads’ diminishes, so both into winter and beyond into 2021, we anticipate that kneejerk digital transformation caused by the Coronavirus will need to mature into strategically-driven, experience-led investment.

This report comes as no surprise – looking at trends outside of Covid-19, Q3 is typically when businesses retain some marketing spend to gear up for Q4 domination. We can see budgets have been retained more aggressively this year, but that was to be expected. It’s also not unusual for businesses to hold back in Q3 if their financial year end is due to be submitted.

We were in the thick of it when the last IPA Bellwether report was published. Uncertainty was at its peak and marketing spend across the board was pulled as brands used this opportunity to test incrementality of channels, or to follow organic demand. Now, online competition has become saturated, and the appetite to invest in marketing is back, with both previous spend and new initiatives and platforms being implemented.

It’s great to read signs of stability predicted in 2021, while GDP may not be restored to pre-covid levels for some time, businesses have adapted and will continue to do so with the resources and budget they have. I’m confident UK marketing budgets will bounce back – it’s just a matter of time.

Sanjay Nazerali, global managing director & chief strategist, Dentsu X

Even when ad investment grows back to previous levels, we will be, in the words of HSBC in “A New Different”. While Covid-19 is driving new behaviours worldwide, it would be detrimental to mistake these for trends, instead of movements which will have become cemented during the pandemic. Consumers are becoming more emotionally driven, with a new found appreciation for their community and families.

We have an audience hungry for support, practical and emotional, and a world trying to find new ways to live. This is exactly what marketing was designed for: to provide people with the right information during the times they need it most.

So, while I expect there will be a boost to ad spend budgets in 2021, it will be those brands that are continuing to invest and adapt their creative to deliver messages of encouragement, helpful information, and guidance, that will reap the long term benefits.

Ali MacCallum, UK CEO, Kinetic Worldwide

OOH media has taken less of a hit than in Q2 as it has been used innovatively and intelligently by brands and public bodies as we emerged from full lockdown.

As we move towards 2021, brands will require flexibility and instant data analysis as marketing decisions are increasingly short term. Thanks to the digitalisation of posters, automated and programmatic OOH allows for trading and targeting to be delivered across thousands of screens in near real time. Marketers have the option to optimise the OOH creative at a moment’s notice by monitoring sales performance and audience indexing. This amounts to a revolution in the sector as data about news, weather, events, and location can be added to the digital mix to better target consumers.

The advertising industry needs to offer more flexibility to brands because we’re facing new level of uncertainties every day – from a possible second Covid wave to Brexit at the end of the year. I believe that we will recover strongly in 2021 as we learn how to navigate this new environment, but until then we need to take the opportunity to innovate how we’re using channels and make use – as much as is possible – of contextually useful OOH.

While lacking in surprises, the latest Bellwether Report is certainly reflective of a sector, like many others, that remains challenged and shrouded in uncertainty. While Q2 called for quick advertiser action, the budget revisions seen in Q3 appear much more considered – like a pause for breath as advertisers take the opportunity to re-evaluate and recalibrate.

While the pandemic has undoubtedly been the primary driver of these downward revisions, we continue positive conversations with our customers; be it about programmatic transparency, the power of first party data or delivering better business outcomes.

The longer term forecast of a robust recovery in 2021 is a welcome sign, and we’re cautiously optimistic as we move into the final quarter of this year. Amidst the uncertainty, Christmas will still happen on the 25th December and I’m sure we’re all aligned in hoping that the tills jingle as much as the bells this year.

Nicola Bevan, managing director of operations, Xaxis EMEA

After a summer of restriction, it was likely the advertising forecast would remain muted. But that doesn’t mean advertisers shouldn’t focus on securing positive outcomes from the ad spend they have available to them during this time. As often happens during a recession, inventory prices drop lower, offering more accessibility for those advertisers keen to retain brand awareness. Yet advertising spend can deliver more than awareness, focusing effort on deliverables that will achieve core business outcomes and impact the advertiser’s bottom line.

As we head into Q4, a traditionally key consumer spending period, and look forward to 2021, prospects are more positive with confidence and spend intentions rising – up by 11.3% next year. A continued focus on return on investment and targeting spend to achieve core business outcomes will put the digital advertising industry in a strong position to stabilise into 2021.