New figures from this week’s Advertising Association/WARC Expenditure Report reveal that the industry is holding its own in challenging times, growing faster than the economy, albeit at a rather paltry 1%.
While the report draws its own conclusions, Decision Marketing asks industry chiefs for their take on the latest spend figures.
First up is Wavemaker UK managing director of audience intelligence and marketing science Dominic Charles, who reckons that while anticipated growth in overall advertising spend is an encouraging sign, the figures still paint a picture of caution in how advertisers are prioritising their investment.
He adds: “Digital ‘performance’ channels are contributing significantly to the spend growth at the expense of more traditional ‘brand’ channels. This is not surprising as the challenging economic situation we find ourselves in will naturally increase the pressure on delivering returns back to the business quickly.
“While it’s tempting in times like this to dust off the 2008 playbook or a copy of the ‘Long and the Short of It’ (other ‘value of brand’ studies are available albeit less ubiquitously enduring) to prove this is ultimately not effective long-term, there’s a more fundamental problem – even if the goal is short-term sales, we’re not necessarily doing that right either.
“Channels like TV, radio and newsbrands have been proven to be as, if not more, effective at driving ‘performance’ as digital channels and have the advantage of creating significantly stronger long-term effects to boot. As budgets remain tight for the foreseeable, marketers who invest in robust measurement such as media mix modelling will likely see disproportionate gains, whether looking over a short or long-term horizon.”
Even so, Brave Bison managing director of performance Hannah Kimuyu reckons the figures reveal a much more positive picture, if you read between the lines. This, she insists, is the market stabilising after a lot of uncertainty; added to this is the fact that we, as advertisers, have quite simply got better at advertising and can drive a lot more bang for a brand’s buck.
Bison explains: “Much of this is down to online channels, which is why we’re seeing so much growth in digital native media. We can deliver highly measurable, targeted digital ads – mainly in search and social – to reach those most likely to purchase from the brand, driving sales on their owned and operated channels. The transition is driven by creator-led content, which enables brands to be far more relatable and engaging.
“What is surprising, though, is that paid social is missing in action in this report, Bison says, despite it being one of the biggest growth drivers for brands right now. In fact, a WARC forecast found that social will overtake Search spend in Q4 2024 – making it the biggest media channel by spend globally.
She continues: “This is a huge deal when you consider that the biggest channel for advertising spend has only ever changed twice. In other words, brands cannot afford to miss this train. Looking forward, as well as visibility in social, brands need to think about how they can best optimise and drive value from the assets they already have. First, think, how do I get my ‘house in order’ to double down on existing customers? Then, it’s time to consider how more investment can attract new audiences.”
Meanwhile, Buttermilk co-founder Jamie Ray believes that, in the face of a volatile economic climate, brands are looking for smarter investment strategies, and influencer marketing has emerged as a cost-effective alternative to traditional advertising methods. It is an efficient way to address the entire marketing funnel because influencers create content that generates awareness, engagement, and conversions all in one place, Ray claims.
He adds: “Influencer-generated content is also valuable in and of itself, acting as a branded asset that can be licenced and used in other contexts or expanded marketing campaigns. And with budgets tightening, influencers can offer a consolidated solution for various marketing needs.”
For JOAN London managing director Tom Ghiden, the report reveals a promising horizon for the UK ad industry. With a 1.0% growth in the market during Q2 2023, surpassing GDP figures, it signals a positive trend.
He continues: “For brands, this signifies an opportune moment. Investing in creativity and brand activity can elevate businesses to the forefront, driving relevance and resonance in the long run. As the market expands, the forecasted 2.6% growth for the full year 2023, reaching £35.6bn, beckons brands to seize the momentum. Double-digit growth projections for BVOD and substantial upticks in online display, out of home, and cinema further underscore the potential.
“Intriguingly, BVOD advertising emerges as a standout success story, poised for a 16.1% year-on-year surge. Sporting events such as the FIFA Women’s World Cup and the return of Big Brother on TV are driving this resurgence, offering brands an enticing platform to showcase their creativity. It’s an exciting juncture for brands to not just advertise, but to captivate and inspire, seizing the spotlight during this resurgence.
Finally, Joint founder Richard Exon is slightly more circumspect over the report’s findings, describing the figures as a “glimmer of light for the advertising industry”, especially as we have also seen the tech giants, Meta, Google and Amazon revealing a rise in ad revenue for their third-quarter results, citing investment in AI tools and automation as the biggest drivers.
Exon explains: “The AA/WARC report highlights key online formats, such as search and online display registering growth between April and June, which is unsurprising given an AI ad push among three of the biggest tech brands.
“Technology has been playing a role within this space for a long time, but now AI is poised to change how the ad industry operates online – making an impact from data gathering, media placement and content curation. However, AI is still in its infancy and as the digital landscape speeds up, to use effectively, advertisers must combine with the best creative human minds in the industry.
“We are also seeing big cultural moments again. Events like the FIFA Women’s World Cup and ‘Barbenheimer‘ phenomenon have driven ad spend in the face of economic uncertainty, while enabling brands to deliver authentic and valuable campaigns.
“As businesses consider their ad spend allocation for 2024, now is the perfect time for brands and advertisers to assess the current landscape and plan strategically for the year ahead.
“Is it in fact time for them to re-consider the online portions of national and regional newsbrands and magazines, which have an expected return to growth, or play it a little safer across the digital and social channels.”
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