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Industry reacts: Q2 2019 IPA Bellwether Report

Tyrone Stewart

The latest IPA Bellwether Report showed that UK marketing budgets stalled in Q2 2019 over political uncertainty, despite a positive start to the year in the first quarter. Here, executives from across the industry share their thoughts on the findings.

Parliament Westminster LondonKirsty Giordani, executive director at International Advertising Association (UK Chapter)
“Despite the negative outlook of the latest Bellwether report, there are still a number of positives. For example, spend in internet marketing remains strong and main media, digital and social have also been given another boost. The upward trend in these areas indicates a move towards longer-term thinking from marketers as they look to invest in channels and tactics that will support steady brand growth over time.

While we’re in an uncertain political climate, it is often tempting to focus on immediate performance metrics to measure success and allocate spend, but a bigger picture view is needed. It’s important for marketers not to neglect branding activities that will drive continued recognition, and focus their budget on the channels (like digital, social and events) where consumer audiences remain engaged and receptive.”

Andrew Buckman, Sublime COO
As uncertainty over Brexit and the Conservative Party leadership continues, the lack of growth in marketing budgets hardly comes as a surprise, as highlighted in the findings of the latest IPA Bellwether report. Despite businesses being increasingly cautious with their budgets, it is however encouraging to see marketers still finding value in digital branding. Digital remains a highly lucrative advertising channel; meaning there will always be demand for campaigns that provide a non-intrusive and engaging consumer experience.

The lead up to summer might be less exciting than 2018, however, until economic and political concerns are clarified, it is likely the rest of the year will follow suit. It will be interesting to see how the UK’s official departure from the European Union in October will affect the industry, as well as the country.”

James Draper, founder and CEO of Bidstack
As marketing budgets stagnate and industry confidence wanes in times of uncertainty, marketers are looking for new avenues to reach audiences and boost brand awareness. Digital and social channels are continuing to prove a fruitful and effective way of advertising to a captive and engaged audience. We know from experience that in-game advertising is one such channel, and expect to see a growing trend toward marketers leveraging gaming platforms to reach their audiences in the virtual world.”

Fabrizio Perrone, CEO and founder of Buzzoole
“It’s heartening to see social media and digital spend continue to grow and that marketers understand the benefits of focusing on these measurable channels to reach and engage with consumers.

To keep their share of today’s market, brands must be agile, innovative and ROI-focused. Smart marketers will be integrating social into their wider strategy - for example, integrating influencer marketing into digital OOH to create measurable authentic campaigns that resonate with consumers.”

Charlie Johnson, VP of UK & Ireland at Digital Element
“With so many factors currently causing uncertainty in the UK – especially in the political and economic worlds – it is no surprise that the increase in marketing budgets has halted. Resources across the board are being squeezed as businesses do their best to prepare for the unknown.

Despite this, it is reassuring to see that investment in internet marketing is still growing. At times of uncertainty, the successful businesses are those that continue to nurture their presence in consumer’s hearts and minds, and as the world becomes increasingly digitalised, savvy marketers are prioritising internet marketing to reach a huge audience and protect their futures.

The next step is to focus on efficiency – ensuring the most accurate and up to date data is used to inform strategies, and to understand, target, and ultimately engage the consumers that are going to bring the most benefit to the business. Technology choices will be crucial in ensuring marketing investments have the impact required when when no one really knows what is around the corner.”

Simon Thorne, UK country director at Flashtalking
“Sophisticated advertisers understand the long-term value in digital advertising as a key means to connect with their audience. While overall marketing budgets have not increased, these advertisers are shifting greater portions of their budget to digital advertising to drive higher ROI.”

Gavin Stirrat, Europe VP for partner services at OpenX
“It’s hard to feel confident about spending in the face of political and economic uncertainty, so it’s perfectly natural for marketers to invest with caution. Spend on social media is on the up, which doesn’t come as a big surprise. After all, the main players make it very easy to execute advertising campaigns within their ‘walled garden’ platforms and, on the face of it, they appear to offer extremely sophisticated ways of engaging with audiences - a likely contributor to their success. 

“But we are hearing loud and clear that brands want to diversify beyond the digital duopoly, giving them easier access to bigger and better audiences. That’s why it’s crucial that marketers are empowered with the ability to engage people in a one-to-one permission-based way outside of these properties and on the open web. The wheels are in motion, and I expect we’ll see this reflected in a much more balanced spending sheet before long – regardless of the political challenges at play.”

Mark Inskip, UK & Ireland CEO at Kantar (media division)
“The latest IPA Bellwether report has shown marketing budgets flatline for the second quarter of the year amid rising political and economic uncertainty, following a positive start to 2019. This news serves to make even more pertinent the message we delivered in our DIMENSION report published earlier this year – advertising still has an important role to play, for both brands and consumers. With consumers growing increasingly apathetic towards advertising – and 73 per cent saying they see the same ads ‘over and over again’ – brands simply cannot afford complacency.

Alessandra Di Lorenzo, CEO of Forward, lastminute.com’s media company
“If I had to make two conclusions from this recent Q2 IPA Bellwether, the first would be that there are no surprises –  we all know that brands across the UK are concerned about Brexit, unpredictable politics and the implications on business and consumer spend.

“Second, despite marketers being cautious in the current climate, it’s really promising to see marketers predicting increased investment in ad spend in 2020. There’s a delicate balance to maintain between short-term and longer-term goals, and it’s imperative that marketers remember to keep looking forward.

“According to Winmo, the average CMO is in their role for less than four years. This means that many marketers may end up focusing much more on the day-to-day, quarter-to-quarter delivery, rather than higher-level strategy around how marketing can make a positive impact on business success. Which, arguably, should be a priority for these turbulent times. The air of caution in the market when it comes to spending on marketing activity highlights the need for businesses to take a step back and look at how they can gain more control of, and impact from, their marketing spend – thinking about this bigger picture is key for organisations to survive, and thrive.

“If businesses are wary of what the future holds, it’s time for marketers to assert their presence in the boardroom and influence commercial decisions. If brands don’t start taking a longer-term and more strategic view, they’re going to undermine the marketing function – and its survival for the future.”

Anna Forbes, UK general manager at The Trade Desk
“It’s notable that, in a quarter of flatlining marketing budgets, the one bright spot of growth is internet-based advertising. We’ve seen a significant increase in the number of brands upskilling in digital advertising over the past couple of years, and these results go to show that marketers no longer see digital as an ‘add-on’ but rather as a core element of their strategy. With such trends set to continue, I think it’s likely that in just a few years we’ll no longer actually be talking about ‘programmatic’ as a specific type of advertising – it’ll just be how ads are bought as standard.  

“But with such power comes great responsibility for our industry. Currently, poor ID matching on the open web means advertisers aren’t able to reach a significant portion of their own, existing customers – never mind new ones. That’s why we’ve created a common currency for anonymous cookie IDs that is available to all and free to use. By working together across the industry, we’ll improve the advertising experience for brands, publishers and consumers alike – ensuring that we see the share of budgets allocated to digital advertising continue to grow and grow.”

Nicole Lonsdale, chief planning officer at Kinetic UK
“From an Out-of-Home (OOH) perspective, it’s promising to see that main media advertising budgets have seen growth since the last quarter. This shows that even in today’s uncertain political and economic climate, marketers know that it’s important to invest in mediums that deliver on long term brand building performance.

“Clearly, an opportunity lies ahead for OOH as part of this – the world’s oldest advertising medium now offers brands the flexibility of digital, with the accountability, mass reach and brand safety of traditional broadcast channels. As the medium continues to innovate with its ongoing technological transformation, the continued rise of Digital Out-of-Home (DOOH) is providing brands with ever increasing dynamic and contextual creative opportunities.”

Hugo Drayton, Inskin Media CEO
“The subdued, rather gloomy (zero growth) highlights from the latest Bellwether report are unsurprising, in the face of prolonged political - and economic - uncertainty in the UK.  As underlined in the report, the experts are braced for a possible short-term contraction in the UK economy, reflected in defensive marketing positions, delayed decision-making and prudence around cash conservation.

“The report's more optimistic outlook for 2020 is somewhat surprising, perhaps simply displaying a hope, or even optimism, that the current despond will be replaced by an upturn in the cycle.  We share that hope.

“Certainly, the short-term is characterised by both economic and political instability, further fuelled by international trade disputes, as well as weak growth in major European and Asian markets; so the caution is not simply a reflection of the UK's parochial dilemma. The report repeats the stark fact that this negativity has not been seen since 2011.

“While there is some cheer in the continued strength of Internet marketing - and a rise in Events marketing - this does not hide the overall difficulties for marketing, especially in key areas such as Research and Sales Promotion.  Some Marketing Directors have used the opportunity to increase brand building (exploiting lower costs) and are using marketing spend in a more defensive manner.”

David Walsh, chief business officer at Mindshare UK
“It comes as no surprise that this quarter has seen a dip in growth, and until we have a clearer idea of our political and economic future, it’s likely that marketers will remain cautious with spend. 

“However, even in today’s uncertain climate, it’s encouraging to see that some marketers have remained proactive about building long-term brand equity, with the report revealing a slight upward revision to main media budgets. 

“It's also heartening to see that marketers are continuing to invest in internet-based advertising, with search/SEO owning the lion's share of growth.”

Matt Nash, Scibids MD
“Given the UK’s current political and economic uncertainty, it is unsurprising that businesses are being cautious with their ad-spend. And whilst it is encouraging to see that internet-based advertising is still growing, albeit slowly, it must demonstrate the true incremental impact it has on the business bottom line

“We now operate in an environment where a one-size-fits-all approach is no longer compatible, and marketers’ goals have become increasingly complex and bespoke. It is now imperative for marketers to optimise towards KPIs that are truly correlated to their business objectives.

“However, with the increasingly restrictive regulatory environment (GDPR, ITP and California), there will also be a need to move away from traditional methods of optimisation, focusing more on context than behavioural targeting. And in my mind, moving forward, the application of AI will be crucial to addressing some of these challenges.”

James Briscoe, chief operating officer at Percept
“After a promising first quarter, it is disappointing yet unsurprising, to see the latest forecasts. From speaking to and auditing with brands daily, the uncertainty in the world has given everyone a pause for thought.

“Indeed, the brands we speak to are now considering how best to deploy future spend and what agents to use. Typically, we see a view of increasing spend within digital but there is also a consideration of the best way to operate digital; whether it is through a move to in-house, a change of agency or even a hybrid model.

“However, a common theme amongst these brands, is a demand for more visibility of their media spend as well as the systems used to be able to control activity directly. It is also likely that future market growth will rely heavily on the new breed of direct to consumer brands (DTC) and a more aggressive marketing move by smaller mid-tier brands looking to acquire market share.

“Ultimately, the changes we are seeing in the marketing and media landscape are not temporary but instead an indication of a shift in market behaviours. And any CMO wanting to keep their job, should be looking to get more visibility and control of their revenue driving activity.”

Luke Judge, NMPi CEO
“Unsurprisingly, with the feeling of economic uncertainty at its highest level for a decade, this is translating into investment hesitation by business leaders. 

“Digital advertising continues to be the safe place for marketers to place their ad spend. It's not only more measurable and demonstrably effective, it's also more adjustable over the course of a quarter. With low up-front spend commitments on digital, the decision to invest more in digital is an easier one to sell to the CFO.

“What's most concerning in this report is the prospect of the increasing negativity leading to less investment in technology, creative, customer experience and data management. Businesses who are investing in these four areas now will be the ones thriving in five years from now. Failure to do so now will invariably lead to a difficult time ahead.”

Ken Leren, Marketing Town founder
“In my mind, in years to come, 2019 and 2020 will be remembered as the years when uncertainty subsided.  

“But the digital advertising industry needs to capitalise on its continued growth trajectory, indeed, earlier this month Zenith’s latest report predicted that by 2020 over 50 per cent of marketing spend will come from digital. And with more and more consumers on the move, marketers will need to ensure they utilise new and emerging technologies and allocate budgets accordingly.  

“The industry however is still facing regulatory and technical upheaval with GDPR and ITP taking effect. And with global brands, notably British Airways and Marriott, facing huge fines, marketers must ensure they remain compliant or risk being penalised.”  

Justin Taylor, UK MD at Teads
“I've always been bullish on the UK economy's prospects as long as businesses and consumers have clear direction on Brexit. Whilst it's a shame that organisations don't feel sure enough to raise their overall marketing investment - it is good to see that clients are trusting their digital partners to maintain communication with consumers during uncertain times.

“Online advertising's benefits are well known, the market is continuing to mature and as creativity, technology and media continue to converge, the online economy will only prosper.”

Dan Peden, strategy director at Journey Further
“As economic uncertainty rises users are becoming more and more value driven. Stats from Google show that over the past two years searches including the word 'best' or 'affordable' have risen by over 50 per cent and searches for brand names + 'discount' or 'sale' are up by 35 per cent. This change in consumer mindset is then filtering down to businesses, who are moving marketing spend away from longer terms projects - such as brand comms or raising consideration - into short term initiatives i.e. paid search - where returns are more immediate.

“On top of this, the data and targeting available within digital only channels is getting much stronger. As TV watch times reduce, we're seeing more spend move online where it can be targeting at more granular audience types with customised messaging. Alongside this, the track-a-bility of channels like YouTube are making them immensely appealing to marketers.”

Sam Huber, Admix founder
“It’s not surprising that business’ are being more cautious about how they spend their budgets and are focussing on internet marketing over traditional advertising. New platforms will grow in prominence as the burgeoning 5G infrastructure is leveraged. 3D content consumption (games, VR, AR) is skyrocketing, up 62 per cent YoY while the growth in consumption of traditional media is slowing down. Advertising is moving from attention grabbing to experiential and XR is the ultimate platform for this. 200+ brands are already using budget to achieve high levels of engagement with consumers, mostly millennials and gen-z. We expect this trend to develop over the coming year.”

Elizabeth Brennan, UK commercial director at Criteo
“The latest IPA Bellwether Report clearly shows that this is the year of marketing consolidation. Budgets are remaining static as marketers are expected to deliver results across a fragmented number of channels.

“However, while spend may not be increasing this year, savvy marketers have the opportunity to ensure that performance improves ahead of wider investment in 2020.

“The key lies in unlocking the value of data. For example, individual-level personalisation will allow marketers to get the most from the data they have and the budgets that do exist. Leveraging machine learning models optimised against key business objectives will ensure that the 2019’s marketing activities are designed to get the most value from available spend.

“What’s more, with artificial intelligence (AI), it’s becoming possible to achieve hyper-relevant ads for true one-to-one offers, content, and ads. Investing in predictive learning models now will help in the long term when it comes to showing shoppers the new products they most likely want to see as AI-powered product recommendation ads improve over time.

“Marketers work day in, day out to get the right products in front of consumers at the moment they’re most likely to buy. The advancement of technologies like artificial intelligence will enable marketers to do more with the budgets they have and ensure that while spend might not be increasing this year, they can ensure that performance does!”

Damon Reeve, The Ozone Project CEO
“It is little surprise that the latest report shows no overall growth in the current economic climate. However, it is promising to see that internet marketing continues to perform as the most effective mode of marketing, showing signs of steady growth (+ 11.5 per cent from the last quarter) and this is expected to rise in 2020. Over a quarter of those surveyed recorded upward revisions to their advertising spend despite overarching budget cuts. This is consistent with the current demand from our clients on their media adspend. What we’re seeing is a heightened appetite amongst advertisers to reach engaged audiences at scale through brand safe and trusted content environments, and in turn this is giving agencies the confidence to do the same.

“For premium publishers, while adspend is only projected to grow modestly, there are still opportunities to attract a greater share of total adspend through scaled audience monetisation, first-party identity and publisher-owned technology. As the dominant technology players come under more scrutiny, we hope to see more opportunities for publishers and brands to capture the future growth.”

Julia Smith, director of communications at Impact
"In a year of politico-economic uncertainty it was always expected that 2019 would see modest growth; social media aside which continues to see significant spend increases. Perhaps more surprising was the rise of negative own-company financial prospects.  I personally think any effect will be negligible  but there was always going to be casualties of the overpowering and money draining duopoly on some businesses. Companies need to continue to diversify and expand their partnerships to generate strong areas of revenue. This, along with the general improved forecast in 2020 will keep momentum and hopefully spend will continue to increase through to the end of the year.”

Jenny Kirby, managing partner for digital service at GroupM
“Looking back at recent quarters, it’s clear that no matter the peaks or dips in marketing budgets alongside political and economic uncertainty, it’s essential for marketers to optimise any available budget for ad campaigns to reach maximum performance. Whether that’s across display, mobile, video, DOOH or even looking ahead at e-commerce environments, it’s not enough to place advertising, or even to know if it was viewed. We need to go further and clearly evaluate if the ad contributed to the greater business objective, to truly drive success and contribute to wider economic stability.”

Bill Swanson, VP EMEA at Telaria
“It is unsurprising to see growth reported in main media advertising – including TV, mobile, and the internet – with spend in this area the strongest it’s been for two years. With consumers watching content across multiple platforms we expect to see video and connected TV continue to help drive digital spend as marketers realise the opportunity for targeted engagement and efficiency they afford.”

Steffen Svartberg, Co-founder and CEO of Cavai  
“2019 has been a challenging year for many companies: political upheaval, issues with brand safety across social networks, and economic slowdown, so it’s encouraging to see another rise in UK ad spend - albeit it modestly. There is a feeling of optimism about the year ahead, with growth coming from new forms of immersive consumer experiences which are defining the future of brand marketing. It is no surprise that the IPA Bellwether report has seen the strongest growth from social media. The introduction of apps, chatbots, conversational advertising and voice bots will all have a significant impact on how consumers buy, interact, respond and view digital advertising. Those that embrace these new formats will be the ones who reap the rewards of the forecast improvements in adspend in 2020.”

Mattias Spetz, Channel Factory MD EMEA
“The IPA Bellwether report predicts muted growth in the second half of 2019 in light of the ongoing and uncertain Brexit negotiations. However, it is not all bad news for marketers and the ad industry, as there is strong growth in certain sectors such as social media and digital.  In a climate in which both marketers and users are demanding trust, transparency and brand suitability, we all, as an industry have to ensure that we remain committed to delivering these crucial elements, if we are to sustain growth across the entire digital ad market. The good news is that digital advertising is still the sector reporting the strongest growth and as long as marketers remain committed to buying fraud-free, performance led, brand-safe quality inventory, they can expect this sector to deliver strong ROI.”

Jenny Stanley, founder and MD of Appetite Creative
“To some extent the recent IPA Bellwether report makes for disappointing reading with no change in marketing budgets registered in the first quarter of 2019. However, the fact that 2020 is forecast to herald an upturn in significant growth will give the industry much needed encouragement. During the slower growth period of 2019, marketers must focus on delivering innovative creative, and experimental marketing if they want to maximise their ad spend across all digital channels.  Now more than ever, marketers must push the boundaries on delivering a big idea through cutting edge creative formats and channels, connecting and interacting with their audiences.”

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