Bellwether Q3 22 IPA: Marketing budget growth slows amid turbulent economic times

Slowing growth, budget cuts and a gloomy outlook were the headlines of the latest IPA Bellwether report, framing an industry in a subdued mood and continuing the course set in the second quarter.

The report was one of small tweaks rather than blockbuster rises and falls, again underscoring the caution with which the industry approaches spending during tough times.

While marketing budgets have continued to increase, the rate of this increase is the lowest since the first quarter of 2021. Although 22.2% of companies surveyed said they increased their budgets in the third quarter, 20.1% recorded cuts, leaving only a very marginal +2.1%. The fact that this balance is well down from Q2’s +10.8% shows the impact of the recent economic turmoil, with price increases affecting consumer spending plans.

We asked a cross-section of the advertising industry for their thoughts on Bellwether’s third quarter IPA report. Here’s what they had to say:

Smart targeting and responsive messaging are critical for marketers to succeed in tough times

The uncertainty in the financial markets is having a huge impact on the marketing industry in the UK. Brands are more careful about budgets in these tough times, and when they spend, they need to make it count. Targeting the right audiences at the right time is essential for a positive ROI, and eliminating lost impressions is of paramount importance. Now is not the time for brands to fade away, especially ahead of big highlights such as the Golden Retail District and the FIFA World Cup in Qatar.

Brands need to be aware of who their consumers are and how they may be personally affected by the weakening economy, and revise their buying behaviors accordingly. Marketers need to be sensitive to where their products stand in terms of essentials versus luxury, and need to think about how their advertising will be perceived by their potential customer when it appears in different environments.

Emma Lacey, SVP EMEA, Zefr

OOH Could Present a Key Opportunity Brands Risk Missing

It’s interesting to see how different channels are getting their budgets cut. With television bearing the brunt of runaway media inflation, it’s perhaps unsurprising to see budgets shifted here. However, it feels like an oversight that the likes of the press and OOH are going through tougher declines than others, though both are scaled, public touchpoints that can reassure in times. difficult.

This raises warning signs that some brands are turning to short-sightedness. Channels like the press, for example, seem to be artificially disinvested by the industry. It’s not always the wrong thing to do, but there is also a risk in overinvesting at the bottom of the purchase funnel. Once a brand’s credentials have slipped, it becomes more expensive to rebuild them.

For savvy brands (with means), there is also an opportunity here. There is a cost advantage to having in underutilized space. Bearing in mind that OOH is currently an attractive option for bargain hunters, prices for outdoor advertising in the UK have fallen by 3.1% since pre-covid times. Additionally, tapping into channels that others aren’t present on will likely give brands an edge over their competition.

Elliott Millard, Head of Strategic Planning, United Kingdom

Marketing teams are feeling these economic headwinds

The latest Bellwether IPA report reflects the decline in market confidence we are seeing across the board. With the cost of living crisis in full swing and inflation on the rise, marketing teams are feeling these economic headwinds and acting cautiously accordingly.

It’s interesting to see the decline in investment in big budget marketing campaigns, especially as the holiday season approaches. This will no doubt be a hugely important time for consumer-facing brands, but the reduced budget is indicative of the kind of advertising we’re likely to see.

With marketing budgets tight, we can expect to see a slew of celebratory content that reflects the mood – and financial situation – of the nation as it tackles a time of economic uncertainty. It’s crucial for brands to exercise caution in upcoming communications and develop campaigns that reflect consumer attitudes towards spending.

Jeremy Hine, CEO, MullenLowe Group UK

Reliable technology partners are crucial for brands in difficult times

It’s no surprise that business decisions and marketing budgets have been affected by inflation and the cost of living crisis. This means brands need trusted partners who deliver real value, prioritizing privacy and brand safety, without compromising engagement.

In a post-cookie world, most are turning to contextual targeting, but many solutions still struggle to provide the tracking, measurement and transparency required. This information (how, where and when consumers interact with content) is essential to support effective optimization and help advertisers adapt in difficult times.

Andy Ashley, Global Marketing Director, SmartFrame technologies

First-party data will be central to publishers’ revenue diversification efforts

The bleak economic outlook will force publishers to work harder than ever to diversify their revenue streams and reduce their dependence on tighter advertising budgets. Whether it’s audio, video, subscriptions, or e-commerce, publishers can’t jump headlong into these new ventures. Requiring huge amounts of money, time and manpower to implement, they need to be sure they are heading in the right direction.

For a new channel to succeed, publishers need to focus on quality and forge close relationships with their audience. First-party data is invaluable in building trust between audience and publisher, while enabling more personalized and valuable content. An effective first-party data strategy should be every publisher’s top priority.

Sivan Tafla, CEO of Total multimedia solutions

Reassuring signs that marketers are pruning rather than cutting their budgets

It’s no surprise that advertising budgets are under scrutiny as the recession turns from probable to confirmed. We see data buyers taking a quality over quantity approach, suggesting that marketers are cutting budgets with lawnmowers rather than a chainsaw, which is the sensible approach in an economic downturn. Advertisers have ample opportunity to make a splash in the second half, with events such as the World Cup sure to attract huge spend (which is reflected in our data, with ticket sales being a major audience segment) .

Alison Harding, Vice President of Data Solutions, EMEA, lotame

Marketing budgets are clearly reduced

While remarkably resilient in the face of such economic adversity, this quarter’s Bellwether IPA report results indicate that marketing budgets are clearly being squeezed. To what extent will depend on the severity and depth of the likely recession next year.

All eyes should be on 2023, and CMOs of premium brands should maintain the line, maintain and, if possible, accelerate their brand activity – marketers’ interest in the report, to boost the visibility of the brand through digital channels, suggests they already do.

Paul Coggins, CEO and co-founder of adludio

Volatility could bring positives as well as negatives in some quarters

We shouldn’t be surprised that the Bellwether for Q3 2022 indicates a slowdown, given the broader economic uncertainty across the country.

However, some argue that this volatility could bring positives as well as negatives in some quarters. Since digital in particular favors near real-time agility and flexibility, it is likely to benefit over other channels. In fact, the report may even suggest that this is already happening: comparing customer spending in Q3 and Q2, “other online” topped the list, with a net balance of +9.3%. Even the “video” category, covering TV, as well as online video and film, couldn’t match that number.

Even if, as the report suggests, the UK recession is short-lived, it seems clear that brands and agencies will be looking to do more with less. Tactics and solutions that can work independently and do not carry subsequent risk can benefit. And as the cookie continues to crumble, identifierless and contextual targeting only seems more relevant over time.

Heather Lloyd, Product Marketing Manager, Nano Interactive

People think more than ever about where their money is going

Such high inflation means people are wondering more than ever where their money is going – on both sides of the coin. Marketers are going to be more concerned with the effectiveness of campaigns and where they are spending the budgets they have. Agencies therefore need to offer robust measurement solutions to show clients the impact of their investments and prove how important it is to keep investing in marketing.

Likewise, brands need to offer something special to really capture their target audience. It’s time to think outside the box and come up with marketing that offers something genuinely useful to the consumer in their daily lives. This is critical to maintaining a positive perception of a brand and growing through the next quarter and beyond.

Sophie Wooller Dent, Director of Digital Transformation, Croud