IPA Bellwether Report Q2 2020 – the industry reacts

Following the release of the latest IPA Bellwether Report, the industry shares its thoughts on the news that the coronavirus pandemic has caused UK marketing budgets to take a bigger hit than the global financial crisis

Harmony Murphy, Head of Advertising UK at 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, its now more important than ever for every single impression to be a valuable one – and, as they get back on track, brands cant 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.”

Justin Taylor, UK MD at Teads
“The socio-economic impact of this quarter has been devastating to all industries, including advertising.

“We must give credit to all of those who have worked tirelessly to maintain continuity and equilibrium to keep businesses afloat and people in employment. We are at the start of our journey, looking at todays GDP growth it shows how much work is still to do.

“However, there are glimmers of hope. That out of cuts and restrictions, often comes the best innovation and chance to reset best practices. We certainly saw, coming out of the 2008 recession, that those who leaned into a new way of working were able to succeed rapidly, and there are signs of this already happening in H2 and into 2021.

“Those who are able to review working practices, with a renewed focus on responsible advertising strategies that harness the power and agility of quality digital environments, will emerge stronger.”

Amy Jackson, Business Director at Incubeta
“Consumption habits and marketing budgets are unlikely to change for the year ahead, but we will see recovery in 2021 provided Government aids proves successful, and the economy comes out of this without a second wave. Marketing will be an essential part of this recovery, so long as budgets don’t get reinvested elsewhere.

“Usually in a crisis – business or otherwise – marketing is the first wire to be cut, yet this time it’s different, as it has been brick and mortar businesses which have been impacted the worst. This only further demonstrates that many brands haven’t been using online to its maximum potential, and are now quickly adapting in a way that will see investment in online grow. As the IPA Bellwether report suggests, brand exposure advertising – predominantly OOH – were severely hit, and there are reasons to be pessimistic if we compare this to the 2008 global financial crisis. If you look at the state of play for marketing then, those who cut their marketing did struggle to return to normality as quickly as others, with issues such as a lack of brand awareness, and competitors moving in on their space. It will be interesting to see the incremental effect offline has on online, and how quickly businesses are prepared to reinvest into their marketing channels.”

Paps Shaikh, Commercial Director EMEA of Nextdoor
“This report is sobering reading, and there is no doubt that there will be casualties during this time. On a positive note, there are several sectors that are benefiting right now, while others have managed to remain on an even keel. On our platform, we have seen sectors such as Technology, Telco, Finance, Insurance, Groceries and home delivery services amongst others that have been strong throughout the pandemic. Now, we are starting to see activity from major retailers that are adapting how they deliver their services and experiences to consumers.

“Under these challenging circumstances, creative approaches to marketing strategies will be the key to success. Consumers want to be communicated in an appropriate way amidst the background of Covid – and this is where the opportunities lie. The most important notes to hit are honesty and trust. During this time of uncertainty, consumers want to feel reassured their investments and purchases are heading to a place that wont negatively affect what is going on in their local communities or on a larger scale.”

Rayhan Perera, CEO and Founder, OneDash
“Current market conditions are a hub for new trends and business development, particularly as the pandemic continues to drive new consumer habits. Despite the IPA’s report that video budgets are down 39.3%, we would expect video to be one area that will remain resilient, particularly with separate reports forecasting UK spend on digital video to reach £3.72 billion in 2020, up 15% from last year.

“This surge in popularity offers brands a chance to tap into the potential of video as an advertising tool by experimenting with interactive, shoppable formats. Making use of these tools now will give advertisers the opportunity to test how effective they can be, as well as give consumers time to adapt to the new visual medium. With Facebook and YouTube already announcing their own products in this area, we can expect shoppable video to be one of the new trends to emerge from the pandemic, driven by brands’ need to find more innovative ways to engage consumers and close the conversion gap.”

Richard Wright, Head of Marketing, Scoro
The largest recorded contraction in advertising budgets may not come as a surprise to many media agencies who experienced this first-hand, but the figures will hammer home the urgent need to cut costs when clients are doing the same. Online advertising is one of the strongest performers highlighted in the report, which also gives agencies a clue as to where their internal priorities should lie. The shift to all things digital is in full flow and agencies that fall behind in this regard will pay a greater price than before COVID-19 re-shaped the industry landscape.

“Agencies should aim to scale back on time inefficient practices, which could mean scrapping mandatory meetings or allowing staff to work remotely whatever the office situation might be. Flexibility should be the priority, starting with making smart investments in tech to aid remote-working collaboration, which will be a reality of life for most of us for the foreseeable future. By focusing on these factors, agencies will be in the strongest financial position to weather the losses of 2020 and make the most of a more promising 2021.” 

Jenny Kirby, Managing Partner, GroupM
“With Q2 bearing the brunt of the COVID-19 lockdowns, advertising spend in the UK has been unsurprisingly stunted. However, a deeper dive into the figures shows some advertisers were actually looking to invest more over this time period. Audio spending is the best example of this, with almost one in five (18.5%) advertisers revising their annual budgets upwards in Q2 and a third (33%) maintaining their levels of investment. Similar figures for video and online advertising more generally shows that the overall picture could be skewed by more traditional forms of advertising, such as out of home, which was negatively impacted.

“A closer examination indicates that advertisers spotted an opportunity to meet marketing objectives through online channels by engaging with consumers while they were at home, and spending more time than over on their digital devices consuming news and entertainment content. The pressing need to prioritise return on investment and achieve core business outcomes meant advertisers were more selective with their spending.”

Lisa Menaldo, Co-Founder, The Advisory Collective
“The Bellwether Q2 report clearly underlines the serious impact that Covid-19 had on many companies across our industry, highlighting that few are immune from its effects.  

“The rapid decline of ad budgets in Q2 meant that businesses were forced to realign and enforce drastic cost saving measures at an unprecedented rate to preserve both cash and employees. With the uncertainty of a second wave of the virus, compounded with the potential economic pressures of Brexit, it is understandable that many marketers remain cautious as we head in H2. But we are already starting to see green shoots of recovery and while significant budgets will not switch on overnight, brands understand that to drive business forward they need to invest in marketing. 

“Media will need to work harder in the coming months, but it is setting the right directional path on the road to recovery as we prepare to head into a more positive 2021.”

Filippo Gramigna, Strategic Advisor, Audiencerate
“Marketers must now start to look beyond the pandemic and prepare for the anticipated robust recovery of macroeconomic conditions in 2021. If COVID-19 has proved anything, it’s that agility matters, especially when bundled with quality, and even more so when it comes to harnessing data for targeting. 

“While technological advances have improved the efficiency of data on-boarding, synchronisation and activation, marketers still wait weeks before they can tap the granular user profiles needed to drive effective advertising — and months to see what impact their efforts create. When consumer behaviour and market conditions are more changeable than ever, this isn’t fast enough to keep revenue rolling. If marketers want to stay ahead of competitors and the ever-shifting climate, they need sharper and more tailored capabilities that will strengthen their data monetisation strategies, to deliver more impactful and competitive campaigns.”

Pierce Cook-Anderson, UK Country Manager, Smart AdServer
“Although media budgets are down across the board, we are seeing clear cases where spend is accelerating in a positive way – most noticeably in the video and OTT space, as well as in gaming. With TV time among adult viewers up 10 minutes per day in 2020, advertisers are taking better consideration of their target audiences, and shifting their ad dollars to digital video as a result. The boost in ad spend for this category should support the industry’s overall recovery and, as third-party cookies disappear, we can expect continued interest from advertisers in what digital video and connected TV can do for them.”

Alexander Igelsböck, CEO, Adverity
“When the pandemic first hit it was natural for advertising to be cut back as marketers needed time to reassess their priorities and to better understand new consumer behaviour. There is light at the end of the tunnel with ad spend recovery expected from 2021, but in the meantime as marketers and advertisers continue to exercise caution, it is clear that critical to short-term and future success is the adoption of data-driven insights and ensuring every penny works as hard as possible.

“Marketers may not always have direct control over the size of their marketing budgets, but they can have better understanding of their data and scrutinise the value of every pound spent. The adoption of a data-driven approach facilitates the opportunity for increased digital efficiencies and is also key to demonstrating the value of maintaining marketing efforts at a time where all spend is under review. For those that get it right, this will prove to be a pivotal year for marketers to gain a competitive advantage with 2021 in mind.”

Rachel Powney, VP of Marketing, Dugout
“There’s no doubt it was a tough quarter for advertisers overall, with uncertainty about consumer behaviour brought about by lockdown. But those same circumstances drove us online in huge numbers, seeking new forms of communication and entertainment to replace face-to-face interaction and live events. This digital silver lining is clearly accounted for in the report, with video and online advertising making up the better performing channels.

“As ad spend recovers, the trend towards digital looks set to continue because certain changes in consumer behaviour will remain in place for the foreseeable future. For example, live sport has returned, but so far fans have not. So clubs and sporting organisations will have to be more creative to keep their larger digital fanbase engaged, and we are likely to see further growth in live streaming and esports as a result. This will in turn create new opportunities for brands to reach these audiences and maximise their marketing spend.”

Chris Hogg, Managing Director EMEA at Lotame
“With economic conditions predicted to make a robust recovery in 2021, this is a pivotal time for marketers to gain a competitive advantage and be in a strong position for the upturn. As both consumers and brands continue to adapt to the ‘new normal’, previous advertising strategies will need to be adjusted to reflect the new environment; this is an opportunity for the industry to create a better tomorrow. 

“Consolidating online and offline consumer activity has always had its challenges, but the obstacles are growing fast with more stringent privacy regulations, third-party cookie blocking, and first-party cookie limitations. To capture the increasingly complex digital life of a consumer, advertisers should learn about and build a panoramic view of their audience to understand their ever-shifting interests and behaviours. Only then can they reinforce consumer connections and come out on top, post-pandemic.” 

Barney Farmer, U.K. Sales & Marketing Director, Nielsen
“While it is clear the impact of the Covid-19 pandemic has reached an unprecedented scale, it is vital the UK industry does not stop advertising. Now more than ever we need to be focused on the future and make thoughtful decisions about how we handle the challenges of the pandemic to shape the industry of tomorrow. 

“The sharp contraction of budgets was inevitable. However, the value of continued investment in advertising is significant, even in tough times such as these. It is proven that almost half of marketing efforts are realised a year after implementation – so even the smallest expenditure now, could be powerful when the recovery kicks in. 

“The use of accurate, trustworthy and independent data analytics will be key to ensuring these pandemic-era budgets are used as effectively as possible and drive the most value, now and through the next year.”

Nick Morley, EMEA MD, Integral Ad Science (IAS)
“It’s unsurprising to see a further downturn across all types of marketing, and with many businesses still operating at a reduced capacity, marketers should also expect a challenging second half of the year. Ahead of recovery expected in 2021, marketers need to make sure available budgets are spent wisely and efficiently – education around the technology and tools available will be key.

“Considering lockdown is beginning to ease, understanding the contextual environment of each ad, and the technology a marketer has deployed, is vital for a successful campaign. Also, an open dialogue between advertisers and publishers will not only enable publishers to communicate what their publishing environment entails, but brands, and their agencies, can define and communicate their brands suitability goals. It’ll be great to see more marketers taking this important step towards contextual control, to contribute to the industry recovery we are all working towards.”

Calum Smeaton, CEO, TVSquared
“The report paints a clear picture of the impact when brands “go dark”. Many pulled back on ad spend while they figured out how to revise business operations during a sensitive period, and refocus restricted budgets on where their consumers were actually spending their time. We’ve seen many direct-to-consumer (DTC) brands thrive thanks to audiences spending greater time with TV, especially where audiences across all platforms have increased, but it’s clear not everyone has been able to return to their pre-pandemic ad spend plans.

“For those marketers that are spending, they’re under increased pressure to prove a clear return on their investments. Marketers simply can’t afford for attribution to be the missing link right now. To prepare for the above-average growth and recovery forecast in 2021, every single campaign must be bought, sold and measured based on data-driven insights.”

Victoria Usher, Founder & CEO, GingerMay
“The outbreak of COVID-19 was a double hit for many businesses. With four years of Brexit uncertainty out of the way, 2020 was the year that many felt would be their best yet – but the pandemic set the industry back once again. 

“The results illustrated in the latest Bellwether report are not a surprise, and match the dire predictions made by economists and the Government. But while the situation is devastating for many, there are strong signs that the recovery is happening fast, with sectors such as ecommerce and gaming in particular doing extraordinarily well. If we continue on our current path, 2021 could turn out to be the successful 2020 we were all hoping for.”

David Bedford, Digital Strategy Director, Cheil UK
As this report demonstrates, cuts in marketing spend were inevitable with such a high number of business closures and events cancelled. And whilst unfortunately this downturn has continued longer than we all anticipated this time last quarter, on the positive side many brands have tried to prove resilient and agile. In particular across the retail, finance, and health sectors, brands have demonstrated huge amounts of creativity to show their support in difficult circumstances and to innovate where they can. Savvy marketers have been able to pivot their strategies and adjust rapidly to the circumstances and have been able to gain market share as a result. What we will continue to see into the next quarter, and for the rest of the year, will be a shift of focus and investment to online. So it will be equally important for marketers to ensure they have the right support and investment to accelerate transformation projects, as these long-term strategies will pay off when the industry recovers and returns to projected growth beyond 2021.

Alex Khan, UK Managing Director, Unruly
This has been a challenging year for all of us, and this is reflected in the latest Bellwether report. As businesses focus on how to best navigate the pandemic, many ad budgets have suffered. However, there are brighter times ahead. Throughout the lockdown we’ve seen a significant rise in digital consumption – particularly across mobile and CTV – as consumers spend more time at home.”

Ian Lowe, VP Marketing, Crownpeak 
“The report shows overwhelmingly that the majority of businesses are experiencing reductions across the board not just in terms of economic prospects, but also to their marketing budgets. With huge impacts to in-person engagement and live events we are now seeing further proof that we have entered a “digital-only” era where brands must deliver great digital experiences in order to survive. With uncertainty about the future economic environment and many questions surrounding a possible return to lockdown, declining consumer confidence in offline engagement, and recessionary pressure, its critical for organisations not only to deliver good digital experiences, but also to be adequately geared up to rapidly react to ongoing changes. 

“To be successful businesses will need to focus their efforts on building a great digital experience infrastructure to deliver quality digital engagement with buyers, decision makers and key audiences by prioritising ease-of-use, clarity and authenticity. It will also be vital to invest in technologies that improve efficiency and reduce infrastructure and maintenance costs. This will allow organisations to eliminate friction, increase agility and ultimately to survive and grow during the upcoming quarters”.

Nickolas Rekeda, CMO at MGID  
“Despite the crisis, pausing marketing activity is not an option for brands wanting to keep a strong market position – particularly as the economy begins to show signs of recovery. However, this doesn’t mean marketers should carry on with the same approaches they were using before the pandemic hit. 

“Marketers should use this time to experiment with new formats and digital approaches; especially given the rise in online audiences. But to gain audience attention in the ’new normal’, brands cannot simply rely on assumptions. Brands must focus on making optimal use of their budgets by prioritising performance-based marketing efforts where effectiveness is easy to track, instead of long-term brand awareness campaigns.” 

César Melo, Head of EMEA, Vidmob
“The wider context reveals that the disruption caused by the pandemic created positive opportunities as well as challenges. 

Alongside plunging media budgets, Q2 delivered strong spending growth in sectors that include CPG, eCommerce, and gaming. Moreover, forward-thinking global brands that understand the importance of technology in delivering enhanced efficiencies adopted platforms to streamline workflow and measurement tools to improve ROI. They also diverted dollars away from offline and broadcast media toward digital channels. On the whole, the impact of COVID-19 expedited digital transformation, and businesses already moving with this tide and dialing up technology investments will be the long-term winners.” 

Andy Ashley, International Marketing Director, Digital Element 
“It is no surprise the global pandemic has hit the advertising industry hard, but while this latest report makes for some difficult reading, marketers should not give up on driving positive results and future success.

“At these times of uncertainty, making the right decisions about internal processes and tools is arguably as important as the messaging being displayed to the public. Efficiency and accuracy are absolutely critical to ensure the budget advertisers do have available goes towards driving as much value as possible. 

“As we see advertisers try to adopt the best strategies to maintain business over the next few months – and drive growth when recovery eventually begins – decision makers need to select versatile tools they can trust to address multiple challenges. For example, IP Intelligence data can be used to not only localise content and target effectively – especially important for increasing responsiveness and revenues in these times where we see huge shifts in consumer behaviour – but also address the challenges of fraud and rights management.”

Ivan Ivanov, COO, PubGalaxy
“The sombre picture across every category is not unexpected news for digital publishers. With constant changes in buyer behavior as the pandemic unfolds, the supply-side must work to keep ad revenue steady, with an agile blend of experimentation, smart operations, and reliable demand. Importantly, publishers need to embrace the chance for experimentation, moving with buyer needs, and making the most of their assets, such as utilising revenue from a variety of different campaign verticals. 

Maintaining strong traffic should also always be a priority, and evaluating minor changes in UX and interface design could see increased audience engagement in the future. Digital publishers could also revise the programmatic setup to accommodate buyer requirements; a good place to start would be optimising to satisfy different pricing models. And while there is no cover-all method for surviving the current market turmoil, adaptation will be essential to survive this uncertain time. Focusing on small steps to adjust activity for the best possible results now will help achieve greater future success.”

Jeff Meglio, VP Global Demand, Sovrn  
“As the report highlights, advertising budgets are still off the pre-COVID pace, down 9.9% from Q1. The near-term impact to digital publishers remains unclear as advertiser budget constraints cause their spend to shift to only paying for “outcomes” such as clicks, sign-ups, or consumer purchases with less focus on simply serving an ad that may or may not be seen. Publishers that can adapt their product offering to cater to native commerce or affiliate marketing are likely to attract performance budgets. No doubt its an unprecedented time. In addition to grappling with the disruption caused by a global pandemic, publishers need to be working with their exchange partners on solutions that will help them stay relevant and desirable after the deprecation of the third-party cookie – a scenario that may play out sooner than Googles two-year timescale. The time is now to be thinking about near and long-term diversification.”

Phil Acton, Country Manager, UK & Benelux, Adform 
“The report makes sobering reading and shows the widespread impact of this pandemic on marketing budgets. As businesses naturally face increased cost pressures, they will seek to streamline and find more efficient ways of working. Advertisers need support from their partners to bounce back quickly and it is those with access to integrated software solutions that will really make an impact, as marketers work to move their companies out of the downturn as fast as possible.

“With the consumer behaviour shift outlined in the report, marketers need efficient, accountable and performance-driven solutions that enable them to accelerate their transition towards digital, continue to reach consumers at scale and better manage costs. This will largely come via digital platforms and particularly programmatic advertising, as unfortunately traditional media channels such as OOH and Cinema no longer provide the mass audiences marketers need. Instead, mobile, video, audio, and gaming are emerging as the leading routes to communicate with consumers.”

Chris Daly, CEO, Chartered Institute of Marketing
“Today’s IPA Bellwether report shows marketing budgets at their lowest level for 20 years as the coronavirus crisis continues to hit brands hard. It is critical, for the future of both the marketing sector and the wider economy, that firms realise the need for marketing as the economy reopens.

“The quarter started with brands across the globe including Google, Coca-Cola and Channel 4 announcing budget cuts or freezing and large agencies including WPP and Publicis Groupe making financial and staffing cuts to safeguard their businesses against the impact of Covid-19.

“The firms that succeed in the long-term will be those who invest in marketing their products and promoting their brand while others cut back. Whilst it is still unclear the long-term effects on marketing budgets, we must see a return to marketing spending if we are to succeed in restarting the British economy and protect our world leading marketing industry.”

Ben Little, Founder and Director of Fearlessly Frank
“At the start of this year marketing was, on the whole, broadly optimistic with budgets expected to edge upwards and growth roundly anticipated. How quickly the world changes, and how relevant it is for us now to look at resilience and innovation. Marketing budgets have for too long been a measure of success, but they do not tell the whole story. What is going where, and why? Marketing can be the driver of growth but it must be bigger than just ‘advertising’ and spend. For those who understand this, Covid-19 will be a catalyst for change – a reason to reinvent how we operate in order to accomplish business goals. 

“The IPA’s director general Paul Bainsfair rightly points to the need to invest in recession in order to profit from better days. But marketers must ask themselves – where should this investment occur? At a time when consumer behaviour is more frenzied than ever, at a point when nobody knows what’s round the corner, it is incumbent on all of us to reimagine how we operate. At a time when there is no business as usual, budgets must be allocated to enable imagining the unknown. This is a once in a generation opportunity to take a look in the mirror without fear or favour. Let’s take it.”

Vihan Sharma, Managing Director Europe, LiveRamp
“It’s concerning but expected to see that most aspects of marketing have contracted over the last quarter. Yet fortunately for the industry there are many silver linings. 

“Research suggests that while many advertisers pressed pause in the early weeks and months of the pandemic, they are committed to investing in the future and budgets are anticipated to bounce back in 2021. An increase in spend can’t come soon enough – slashed budgets have effectively forced certain brands into liquidation, while publishers have to become more creative and nimble in devising new ways to monetise their content amidst declining CPMs; quite the juxtaposition given content consumption is higher than ever. 

“But as is often the case, necessity is the mother of invention, and this period of growth has given marketers the chance to re-examine their strategies and budgets. With increased scrutiny on ad spend, budgets are being optimised and allocated to more addressable, accountable and measurable tactics such as people-based search, programmatic, and advanced TV. 

“What’s more, given the pandemic has hit at a time when third-party tracking cookies are in the process of being eroded, brands and publishers have accelerated the pace with which they are evaluating alternative solutions that are more persistent and offer improved ways to target and engage with consumers via privacy-centric, first-party data strategies.  

“Q3 2020, is likely to be a tricky period for the industry as a whole, but by viewing this as an opportunity to reimagine and revise strategies, brands and publishers can help ensure their future success.”

Justine O’Neill, Director at Analytic Partners
“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 turmoil. In over 100 cases, more than half of brands saw improvements in ROI during the last recession so the key takeaway for brand survival is to adapt in the short term and invest in the long!

“Moving forward, brands have no choice but to adapt to the ‘new normal’ and find new and effective ways to communicate with their audiences. Budgets will continue to be shifted, there’s no way around it but data should be the guiding light for brands, to enable them to adjust channels and messaging. Companies that adopt data-driven simulations in times like these drive at least 5x the growth versus those that don’t so brands should look to use scenario planning, live models and agile learning to strategically plan for the future, even in uncertain times.”

Owen Hancock, Marketing Director EMEA at Impact
The latest figures from the IPA Bellwether report are hardly surprising. COVID-19 has had a significant impact on all aspects of our industry, but while few have come out of this period unscathed, I too am optimistic for a strong bounce back in 2021. What is encouraging is that the new normal has brought about innovative ways of operating and driven a growth in new partnerships. Brands will be striving to deliver an increased return on investment and will be keen to engage with like-minded partners who see the benefits in working together. I expect to see stronger partnerships born out of the pandemic as brands strive to deliver an increased return on investment.”