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IPA Q1 2020 Bellwether Report – industry reaction

David Murphy

With the release earlier today of the IPA’s latest Bellwether report for Q1 2020, we asked the industry for their reactions to its contents…

Jon Burton, marketing director, John West:
“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.”

Paul Rowlinson, managing director, GroupM Digital UK
“The COVID-19 crisis has severely impacted many clients' businesses and naturally in many cases advertising has been stopped or significantly reduced. There is still a significant proportion of clients who are able and want to advertise though, and for these clients there are many opportunities, especially in digital video (in particular entertainment apps), digital audio (including podcasts) and gaming apps which have all seen consumption soar during lockdown.

Importantly, consumers are also turning to trusted news sources in huge numbers, with the greatest increases seen in younger audiences. For advertisers able to take a balanced approach to brand safety around COVID-19 related content, the online news publishers are an excellent way to reach consumers with the right message. It is absolutely essential that the tone and content of the creative message is right of course, and in practice this means creating custom measurement metrics to ensure campaigns are best aligned with clients’ business objectives to ensure the right outcomes from their digital media investments are delivered.”

Sebastian Gray, co-founder and SVP, Dugout
“The reduction in ad spend is a natural reaction to recent events, and an unavoidable one in many industries such as travel and hospitality. Aside from budgets naturally being paused, a large part of the hesitation in Q1 2020 was down to blanket keyword blocking that avoided association with coronavirus-related media entirely, making it hard for advertisers to safely reach their target audience.

“As the year goes on, advertisers and publishers need to work more closely, identifying ways to make the most of high search volumes and consumers’ desire to be entertained and stay connected to the outside world. This can be achieved through targeting premium placements with confidence, with video suppliers and publishers supporting this approach. For example, sponsored editorials offering advice on how to stay fit and healthy during lockdown and contextually-relevant ad placements within video content that take advantage of consumers increased online activity.”

Paul Frampton, president, Europe, Control V. Exposed
"We ended the last decade on a wave of optimism: after quarters of contraction, budgets edged upwards once more – with confidence this would continue into 2020. How quickly things change! COVID-19 and the effects it has already had on this industry (and more importantly, society at large) are dramatic: now, more than ever, it’s time for a reset.

"Coming quarters will continue to see hits to overall marketing budgets and though some predict a swing back into 2021, none of us can accurately predict how, or when, this will happen. Sectors such as travel, hospitality and live events look likely to face restrictions for many months to come.

"What is more certain is that the shape of budget-setting will accelerate to digital and addressable channels in light of this crisis. Digital will inevitably do well – it’s highly measurable and closed loop, and right now there is a surge in consumption on social and display. We’re also likely to see an accelerated pivot towards addressable TV and video solutions, with direct-to-consumer brands in particular, looking to leverage the medium to build targeted awareness with an audience-focused approach.

"And brands brave enough to keep spending in this environment will benefit from significant drops in CPMs – reduced competition and improved pricing dynamics mean it is a good time for advertisers to spend and steal share of voice from others."

Paps Shaikh, commercial director, EMEA, Nextdoor:
“The Coronavirus pandemic is impacting businesses across the globe, and the latest IPA Bellwether report is a reminder that our industry is not immune. During times of increased uncertainty, it is common nature for panic to take hold, with marketing usually one of the first functions to be put on hold. However, there is a balance to be struck between turning activity off entirely and continuing to communicate with consumers when they need reassurance the most. When normality resumes, it will be those brands which have used this time to do good and express a purpose that will be front of mind with consumers.

“I fear these findings are just a sign of what’s still yet to come, and unfortunately there are likely to be many more casualties along the way. However, in the midst of uncertainty lies opportunity, with some verticals experiencing a mini-boom during the current crisis. Marketing at this level is possibly unknown territory for some of these brands, yet as they start to see the full potential, and as others start to slowly turn the tap back on, there is no reason to doubt the forecasts which suggest spend will bounce back.”

Ben Little, founder and director, Fearlessly Frank:
“The latest IPA Bellwether report mirrors the findings of many other surveys of market sentiment, where we are seeing more uncertainty and more confusion than ever before. The current popular understanding of economies, markets and marketing is simply inadequate to accommodate the scale of the change engulfing us.

"While it is hard to plan against years of unpredictability and uncertainty, we must face the fact that there will be no ‘return to normal’, meaning the current model of marketing will no longer be fit for purpose. Instead, zero-based budgeting will be the only way to run a business, which has profound implications for any marketing services business. This will accelerate the shift towards the gig economy and in-housing for most marketing, and exacerbate the urgent need to build a value-adding strategic relationship with all clients.
“Critical thinking, originality and objective evaluation of behavioural data and economic research will be the characteristics of success. Anyone not willing to embrace these approaches is unlikely to survive.”

Amit Kotecha, marketing director, Permutive:
“Optimism beyond the pessimism is the underlying message of the latest IPA Bellwether report. We may not have seen total marketing budgets decline this fast since the global financial crisis, but these are extraordinary times. Coronavirus has put paid to a lot of activity this quarter, but many marketers expect it to pick up over the course of the year: ad spend might be down in 2020 but most expect recovery into 2021.

“Whilst we understand the rush to cut budgets in the confusion of the immediate situation, history shows that those who spend through the bad times are better placed when better times return – as the IPA itself acknowledged last week through an ad campaign in the Financial Times. In fact, reaching your audience through trusted, premium environments such as the FT.com and its more consumer-focused counterparts is probably more important and effective than ever. Now is the right time to support them – for the future good health of your business and theirs.”

Ian Lowe, VP of marketing, Crownpeak
“While these results aren’t surprising, what we’ve noticed recently is that the current pace of change is amazing, with business perceptions on the pandemic – its short and long-term impacts – adjusting every week. This report highlights that budget cuts are already underway, and with most CMOs predicting further severe reductions over the next 12 months, everyone is creating cost-cutting scenarios, but the speed of marketing itself has seen huge increases. For example, our customers are editing content up to nine times the normal daily rate so we’re expecting a marketing mindset of ‘do more with less’ to pivot from aspirational, to essential.”

Ivan Ivanov, COO, PubGalaxy
“As marketing budgets and ad spend are hit by the immediate impact of COVID-19, we’re already seeing the effects on digital publishers. For one-dimensional websites, these will vary according to the verticals they operate within. While some might be currently experiencing a higher rate of ad campaigns in sectors such as gaming, tech and electronics, others will be suffering from reduced ad spend in tourism, hospitality and leisure, for example. However, success in 2020 for all-size publishers is going to depend on their ability to keep adapting advertising offerings to meet shifting needs.

With ad revenue fluctuating, publishers need to access more stable sources; reconfiguring their programmatic setup can help. There are channels — that operate on result-based marketing — that can be a safer option for maximising buyer returns during difficult times and by fine-tuning their supply to match demand-side trends, publishers can continue to find monetisation options to support them through the next stage of the crisis.”

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.’”

Michael Nevins, CMO, Smart AdServer
“The current crisis means companies have direct control over money going out, but not coming in. Many have therefore paused marketing spend to focus on what will generate revenue tomorrow, thinking only of the short-term, rather than six months down the line. This is very much a similar situation to what the industry saw after the 2008 stock market crash, during which the entire ad market declined by 13 per cent.

“However, unlike with the financial crash, the industry today is better prepared for recovery – the IPA forecasts a 1 per cent rise in ad spend following the crisis – and has a positive means by which to do so. Far from being a time to pause media spend, the industry must work to champion the independent publishers who uphold the media ecosystem and provide access to critical public service news. And part of that is a responsibility for advertisers to support quality British journalism at this time.”

Charlie Johnson, VP, UK & Ireland, Digital Element
“The optimism and adaptability of the industry at this unprecedented time has been impressive. While a downturn was inevitable, the strong expectations for a quick recovery after the pandemic are encouraging and testament to the spirit of the sector we work in. Business leaders are realising how adaptable their employees are in this new era of remote working and embracing the contact-free means to develop business, moving seamlessly to digital and virtual events, as an example.

As the industry evolves through this uncertain time and begins to prepare for a positive future, the ability of both teams and the tools they use day-to-day to adapt to changing business needs will continue to be paramount to success. As we work to weather this storm and ride through the pandemic, the solutions available to marketers are being scrutinised more than ever, due to the need to drive efficiency and accuracy. It is those multi-purpose, reliable solutions that give businesses the foundation on which to do great work that will gain loyal customers now and most importantly support long-term results.”

Nick Morley, EMEA MD, Integral Ad Science
“The Q1 2020 IPA Bellwether Report indicates an unsurprising downturn due to marketing budget cuts sparked by COVID-19. As an industry, we have a responsibility to support marketers in every sense: with empathy, support, thought leadership, data, guidance, and real solutions to problems. It was positive to see the optimism within the IPA report regarding the UK economy, however, with many expecting a full recovery during the coming financial year. Now really is the time to pull together, work directly with industry bodies and governments to find solutions at a time where technology can be used for the greater good.

“Throughout this contextually sensitive situation, brand safety and suitability remain at the forefront of marketers’ minds. Instead of a broad application of keyword blocking, at IAS we are advising a more pragmatic approach, with the consideration that not all COVID-19 content should be deemed unsuitable. Given the vital role of trusted content in keeping the public safe and informed, we are advising thoughtful consideration to how advertisers can support quality media outlets. For publishers, leveraging technology that provides necessary page-level analysis of context and sentiment can minimise media wastage and maximise yield amid increased site traffic, ensuring that ads are matched and less likely to be blocked.”

James Draper, CEO, Bidstack
“The report provides an unsurprising outlook for the media industry, as marketing budgets shrink and brands shy away from the limelight. However, we can be optimistic for the economic recovery predicted for 2021 and, in the interim, look to the sectors experiencing an influx of new audiences as people stay indoors.

“Gaming is an example of a sector thriving among the chaos. This has been recognised by the UK government – which is collaborating with developers, such as Bidstack’s partner Codemasters, to reinforce its ‘Stay Home Save Lives’ messaging during the COVID-19 pandemic in some of the most popular video games, such as DiRT Rally 2.0. Gaming provides a bright spot in these bleak times for brands looking to connect with this evolving audience, in an environment rich with real-world advertising opportunities.”

Alexander Igelsböck, CEO, Adverity
“From Brexit to Coronavirus, so much has changed since Q4 2019. Clearly, 2020 is going to be one of the most challenging years as marketers seek to maximise their budgets, many of which are currently restricted. With market research and event marketing budgets experiencing the largest impact in Q1, the value of efficient marketing tools and data-driven approaches to advertising will be more critical than ever. Every marketing pound is under scrutiny and expected to work harder.

“The global impact is impossible to avoid, but during times of change comes demand for increased innovation and efficiencies. While we have already seen evidence that creativity supported by data-driven insights does not have to be stifled due to reduced budgets, it is hugely encouraging to see evidence that industry sentiment for a quick recovery is strong. Understandably, the short-term outlook may provoke caution among advertisers, but looking further ahead is critical and we must all be planning for the now, the then, and the next.”

Niki Stoker, COO, A Million Ads
“The data reflects the impact of a once-in-a-lifetime pandemic, but obscures the underlying strength of some of the advertising channels and their future value. Whilst audio investment was revised downward by a net -6.9 per cent, this disguises the fact almost three quarters of audio budgets (71.8 per cent) are expected to remain stable for the financial year. Even in uncertain times, there is confidence in this channel to reach people who are increasingly relying on digital radio and podcasts at home to get their news and entertainment. We only expect to see this confidence grow as we emerge from lockdown”

Maria Cadbury, managing director, Persollo
"We are noticing a high increase in social usage and a halt in branded content, as production teams and consumers stay inside. Conversely, there is a huge spike in the uptake of influencer marketing, as influencers create compelling brand content from their homes. The real success for influencer marketing comes with advanced social eCommerce technology, which is driving sales, and with AI-driven analytics technology, to give brands the brand safety and fraud transparency stamp for reassurance. Now at this crisis time of COVID-19, more brands are testing new solutions and incorporating eCommerce technology into their influencer shoppable strategy, which is driving sales”.

Phil Acton, UK country manager, Adform
“The impact of the current crisis is being felt across the board, and this report evidences the impact to marketing budgets. As a company founded shortly after the 2001 dotcom bubble burst and a business that navigated the 2008 crisis, we know that rapid and decisive action is needed to ensure the predicted recovery in 2021 is a reality.

If an aircraft encounters turbulence it is your first responsibility to secure your own mask and then look after those travelling with you. So, as an industry, we have to look after our own people and strike a balance between our employees’ needs and well-being, with the practicalities of navigating this crisis for the business. What we have seen is brands, agencies, and publishers facing rapidly-changing market situations, which call for additional help. Some examples we have come across as industry leaders include internet traffic being through the roof, engagement up, but prices are down. Our clients need enhanced support and effective service teams to weather this storm, which is why timely knowledge, insights, and guidance are more important now than ever.

“Adform is extremely proud of how its employees have risen to the occasion with a sense of investment and commitment, and while significant challenges await the industry – with the report anticipating a -13.7 per cent decline in expenditure before the rise begins in 2021 – Adform is keen to move forward. Together.”

Calum Smeaton, CEO, TVSquared
“The report shows the flux the advertising industry is experiencing as some campaigns 'go dark' and budgets are reviewed. With brands looking to optimise costs, there’s a clear need to understand where and how audiences are now spending their time with media. More specifically, TV audiences across all platforms – linear and digital – have increased, but marketers need the tools to take full advantage of those new opportunities.”

“For many, the missing link is attribution. To ensure the longevity of reduced advertising budgets, every single campaign must be bought, sold and measured based on data-driven insights. This will enable marketers to not only prove campaign ROI, but continuously measure creatives, programmes, days, etc. to optimise buys that deliver the best possible audience response. While the report anticipates a shrink in ad spend this year and recovery in 2021, brands must consider if 'going dark' on TV is worth the knock-on-effect to digital and social efforts, as well as brand awareness – aka the halo effect TV provides. It is more necessary than ever for brands to make sure they’re visible to audiences and maintain meaningful connections with them.”

Tom Castley, UK VP, Outreach
“The COVID-19 pandemic is having serious ramifications for the economy and business confidence, with UK marketing budgets unable to remain immune to decreases. With businesses needing to be more efficient in their spend, marketers need to ensure their programmes are delivering results.
Marketing has always been about opening the funnel wide to attract as many leads as possible, then passing them on to sales to qualify and close deals. Now more so than ever, both functions need to work more closely to ensure campaigns are reaching the right audiences and are helping to build a robust pipeline of leads. Having the right tools to enable this collaboration will be a key part in providing an effective feedback loop along the funnel, enabling marketers to quickly pivot their activities where needed. This can only be achieved by throwing out the cliched disjoint between the sales and marketing functions.”

Henk Campher, vice president, corporate marketing, Hootsuite
Although budget declines are in line with what is happening in the economy, that doesn’t mean an abandonment of marketing. P&G for example has ramped up spend during the COVID crisis and judging from their recent financial results the gamble has paid off – but you don’t need to be the world’s biggest advertiser to see results.

The brands that will come out of this crisis strongest will be the ones that quickly adapt digital marketing strategies and make the most of owned channels. Marketing is ultimately about building relationships, and that doesn’t always need to involve big budgets. Something as simple as getting communication right over social media can build and maintain loyalty amongst customers more effectively than fancy ad campaigns. For example, Hootsuite data continues to show a more than 30% increase in the use of Inbox, a tool that manages 1:1 messaging and customer interactions. This shows a real opportunity for brands to both engage with their loyal social media followers on their public channels, and build one-on-one, long-lasting relationships with consumers they otherwise may have struggled to reach on their private channels.

Social is returning to the basics in terms of what's important – authentic interactions. Budgets may have been reduced but by reallocating resources, it doesn’t have to impact brands’ relationships with customers."

Anna Jaycocks, marketing director, Blackhawk Network
“With both marketing and essentially people’s budgets continuing to take a hit, marketers are currently having to totally rethink their acquisition strategy. It’s not going to be just one ad they’ve seen on social media or a well-worded PPC click that will be enough to make customers part with their cash. Consumers are more sensitive than ever to price and brand advocacy is going to play a huge part in this. The Aberdeen Group found that in normal circumstances, reward-based incentive programmes can outperform programmes without rewards by 30 per cent. So imagine the impact they can have when people are actively looking to be rewarded or save some money.
A solid loyalty program that rewards customers for their purchases or a reward as a nice added extra for choosing to switch could make a huge difference to a consumer, especially one who may be struggling financially. In times of hardship, consumers remember the brands that supported them.”

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.

Sam Martin-Ross, founder and MD, Digital Uncut
"Coronavirus has had a significant impact on all businesses already. It's not surprising that in industries where people aren't currently buying, companies are marketing less, or perhaps not at all. Startups/SMEs in particular may need to save cash to survive.

But as the report hints - there is optimism for the coming months when things go back to 'normal'. With that in mind, there are two things brands can do right now.

Given the time investment needed to achieve best-in-class SEO, now is the time to maintain focus. Getting to the top of search results can position the business to succeed when things return to normal.

And more generally, startups should use this time to focus on assisting and giving back to their community or important causes alongside their usual growth metrics. Consider it 'investing in the top-of-funnel brand awareness'. A study by McKinsey showed this strategy to be effective when deployed during the 2008 crisis."

Mark Inskip, CEO UK & Ireland, Kantar (Media Division):
“Following a promising forecast for advertising and marketing budgets going into 2020, the colossal impact of COVID-19 has meant we’ve started to see the complete opposite. We know that even during challenging economic times, advertising remains crucial for both brands and consumers – according to Kantar’s COVID-19 Barometer, only 8 per cent of consumers globally believe that companies should stop advertising at this time. Not only are people craving a sense of normalcy in their lives, but, when shown in the right place and at the right time, consumers find advertising both useful and entertaining.

“As businesses tighten their belts in the face of a post COVID-19 economic downtown, advertising and marketing budgets are likely to be under intense scrutiny. This means it’s all the more important for brands to use the available budget wisely, tailoring their content appropriately to the consumer experience and measuring each step of their campaigns, to ensure valuable and engaging content is targeted at the right consumers on the right platforms. Despite budgets being reduced now, the IPA Bellwether forecasts that we will start to see an uplift again later in 2020 and into 2021, making it even more important for brands to remain present and relevant to their audiences through the difficult times, if they are to weather the storm and come out on top.”

Justin Taylor, managing director, Teads:
"The Bellweather is a fantastic report that, year-on-year, reveals the nuances in market that are difficult to see without the full picture. But this quarter, there are not a lot of secrets that we don't collectively know. The only thing up for debate is how we all look to exit the crisis, whether it's a gradual return to normal or if the lights come back on quickly and decisively.

“Our crystal balls are harder to see now we're looking at them through our bedroom windows, so it's fair to say the future is murkier than ever before. For now, all we can do is support our agency and brand partners to handle the crisis as best we can. We fully support the IPA's ad campaign that, where brands can, they need to invest in marketing during difficult times. But for those who are feeling the effects of the downturn then that isn't possible. So for businesses, brands and their teams alike - staying healthy is the ultimate priority."

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