A recent report from the Institute of Practitioners in Advertising (IPA) has forecast an uncertain and unstable near-term future. The IPA Bellwether report detailed that, despite an increase in marketing budgets for the quarter, growth has slowed considerably.
Let’s take a look at the IPA Bellwether report in more detail and then discuss what the forecast means for affiliate marketers.
What Does the Report Say?
The report assessed ad spend for the Q3 2023 period, finding that growth had slowed to 5.3%. This figure means that this period was the slowest in terms of total marketing budget growth since Q2 2022.
Surveyed companies were pessimistic about the future, with nearly a quarter expecting no ad market growth in 2023 and 2024. This was almost double the number of those surveyed in Q2 2023, indicating more widespread concerns.
To compound the worries the IPA Bellwether report will have raised, an S&P Global Market Intelligence prediction downgraded the UK GDP forecast from 0.4% to -0.1%. If correct, this would mean the UK economy is heading for a recession.
However, there are some positives to take from the report. It detailed a 7.4% increase in main media spend, welcome growth given the metric’s faltering performance in the previous quarter. What this suggests is that brands are focussing on the long-term rather than quick-fix sales campaigns. Online channels represented the most significant segment of growth at 9.1%.
What Does This Mean for Affiliate Marketers?
The word ‘recession’ is never one marketers and business owners want to hear. Recession means reduced consumer spending and businesses will struggle to generate the leads, sales and conversions they need to succeed.
However, there are opportunities for affiliate marketers during times of economic hardship. While consumer spending will decrease, customers will be on the lookout for deals and bargains. This can be the perfect way for you to generate sales using discount codes and offers.
During the economic stagnation we saw during the pandemic, we saw ecommerce sales skyrocket. This could suggest that consumers are more likely to shop online during a recession, which is ideal for affiliate marketers.
This could be why, despite the grim picture painted in the IPA Bellwether report, we have seen an uptick in main media spend, with a particular focus on online channels. Companies will be aware of the potential digital marketing has during a recession and will be taking steps to ensure they can implement such campaigns when the economy turns.
However, a reduction in marketing budgets across the board could mean companies have to scale back their affiliate programs. While affiliate marketing has proved to be relatively resilient in the face of recession, it still looks like there could be some tough times ahead for the industry.
The IPA Bellwether report makes for bleak reading. No marketer or business owner wants to hear about an impending recession. However, growth in main media spend could suggest that companies are looking to focus more on online channels given its resilience to economic instability, which could prove to be a silver lining for affiliate marketers.