This week’s IPA Bellwether Report reveals worrying signs that the economic uncertainty is starting to hit marketing budgets, despite some brands following the “keep calm and carry on” mantra.
However, there were always going to be bumps in the road ahead so Decision Marketing gauges industry opinion on what it all means.
For the events industry, at least, the report reveals that the Government’s “living with Covid” strategy has proved a boon.
Imagination chief executive Patrick Reid comments: “Another fantastic result for the experience sector as we see marketing budgets continue to grow for the second quarter in a row (+22.2% in Q2 and +18.7% in Q1).
“The latest Bellwether findings reflect an unaffected appetite for live experiences and face-to-face interaction from Q1, made clear by the success of events such as Glastonbury, Wimbledon, Pride and UEFA Women’s Euros.
“Brands are riding the wave of consumer demand for real-life experiences, embracing face-to-face activities and activations but with a broader hybrid format, allowing engagement across multiple channels to generate both depth and phenomenal reach within their audiences. With arguably our first restriction-free summer since 2020 in full swing, we predict that these positive results will continue into Q3.”
For Strat House founding partner Rachel Clarke this increase in spend on events – and on PR – is reflecting the wider consumer need for something to engage their interest.
She explains: “Consumers may be cutting overall spend, but they want to experience something different after the last few years. PR will drive awareness and interest, as well as pushing the messages about how a company may be giving something back to support their customers through the hard times. Hopefully, creative will not be the doom and gloom of Covid, but will bring something more to the party even in hard times.
Some disciplines – direct marketing and main media – have seen budgets stagnate, others – including sales promotions, out of home and audio – have seen reductions. Online and video advertising, however, have continued to grow, albeit at a much slower rate.
Econsultancy editor Ben Davis reckons this growth, combined with reduced consumer spending and the return of bricks-and-mortar retail, wil see ecommerce brands fighting it out to win clicks.
He added: “This increasing competition online may drive up the cost of each click, so it’s imperative that advertisers have the expertise to optimise their spend in paid search, marketplaces and display/social.
“At the same time, given the report also highlights the continued branding push in digital, one would expect marketers to place even greater emphasis on the value of a strong organic search presence and engaging social content, particularly given online-to-offline shopper behaviour.
“Lastly, it’s encouraging to read of the intention of businesses to upskill staff in response to a tough labour market – we are seeing brands identify data literacy as one key focus, helping marketers to increase effectiveness but also demonstrate their commercial impact to the board.”
With media inflation set to increase to unprecedented levels, holding steady on spend inevitably means brands will see a decline in reach, says Matt Andrew, UK managing director and partner at global data consultancy Ekimetrics.
He continues: “While it’s extremely well-documented that brands that continue to invest in advertising throughout economic downturns perform the best, for brand marketers to present the best budget arguments in the boardroom, it’s essential they’re able to show the impact that marketing delivers across the business.
“This includes presenting a demonstrable ROI but it is also more expansive than just this: marketers need to share a clear view of how to optimise their spend and the impact of that spend. Optimising for impact will ensure that inflationary media pressure doesn’t translate to declining ROI, which would place marketing budgets under increased scrutiny.
“In today’s market, that means taking a unified media mix optimisation approach to marketing effectiveness that encompasses all channels, with consistent language and meaning across all relevant measures and a laser sharp focus on maximising impact.
“While this approach to measurement can in itself require investment, the route to securing it lies in delivering value along the way, such as beginning with a single product, territory or particular area of marketing to prove impact before rolling out more widely. We’re seeing an increase in demand for the in-housing of effectiveness which is a key objective among our clients. Therefore, a structured programme with clear objectives and skills requirements is essential to success.”
Finally, Kepler EMEA business development director Louis Connor concluded: “With a recession more than likely, it is unsurprising that advertisers are re-evaluating their marketing investment. While offline channels have seen a marked reduction in investment, it is interesting to note the growing, albeit reduced, investment in online channels.
“These channels offer advertisers greater flexibility in executing marketing campaigns without upfront fixed commitment and offer new means through which to reach consumers.
“But as with previous economic downturns, it is prudent for advertisers to consider the long-term impact to brand growth that a sustained period of marketing inactivity can cause.”
Brave brands riding out storm with buoyant budgets
Sector beats Covid; now it must battle war and famine
Ad recovery continues but there will be bumps ahead
Ad budgets up again but the fat lady’s not singing yet
‘Data-driven ads will be key’ as spend finally recovers
Marketing budgets still on life support in the Covid ward
Online spend proves Teflon-coated against Covid cuts
Put your foot down: Brands gear up for road to recovery