Advertising
5 mins read

“In the midst of uncertainty lies opportunity”: The industry reacts to IPA’s latest Bellwether report

The IPA’s latest Bellwether report is both shocking and all too expected. Budgets are down, declining at their fastest rate since the global financial crisis a decade ago.

The coronavirus pandemic has caused broad-based cuts to all forms of marketing activity, most particularly market research and events. Company-specific and industry-wide financial prospects have turned strongly pessimistic and ad spend is forecast to shrink in 2020.

How different it was just a few months ago. When the Institute of Practitioners in Advertising released its 2019 Q4 results in January, COVID-19 was all but unknown outside of China. Overall budgets were up some 4% after two quarters of contraction and growth was anticipated to accelerate through 2020 as the business cycle recovered from a soft spell.

It is not all doom, though. Some 18.9% of respondents signalled growth for the quarter, and many marketers are confident that growth will return later this year and into next. Some 16.2% or firms anticipated higher spending allocations over the next 12 months, signalling a strong level of optimism and suggests many companies planned to grow their businesses and brands.

A number of companies also expressed a determination to tackle the current challenging economic climate, which they expected to be short-lived. A caveat, as Bainsfair outlined: fieldwork for this quarter’s Bellwether Report closed on March 27, just a few days after the Government enacted the lockdown.

According to the latest data, a net balance of -6.1% of companies revised their total marketing budgets lower, signalling the strongest quarter-on-quarter fall in total marketing expenditure since the end of 2009. A quarter of panel members recorded a budget cut.

It is, says IPA Paul Bainsfair, a “sobering snapshot” of the initial impact of COVID-19 on UK businesses’ marketing decisions, urging brands to make “bold” decisions.

What the industry has to say on the latest report:

“In the midst of uncertainty lies opportunity”

Paps Shaikh, Commercial Director – EMEA at Nextdoor:

“The Coronavirus pandemic is impacting businesses across the globe, and the latest IPA Bellwether report is a reminder that our industry is not immune. During times of increased uncertainty, it is common nature for panic to take hold, with marketing usually one of the first functions to be put on hold. However, there is a balance to be struck between turning activity off entirely and continuing to communicate with consumers when they need reassurance the most. When normality resumes, it will be those brands which have used this time to do good and express a purpose that will be front of mind with consumers.”

In the midst of uncertainty lies opportunity, with some verticals experiencing a mini-boom during the current crisis. Marketing at this level is possibly unknown territory for some of these brands, yet as they start to see the full potential, and as others start to slowly turn the tap back on, there is no reason to doubt the forecasts which suggest spend will bounce back.

“Optimism beyond the pessimism is the underlying message”

Amit Kotecha, Marketing Director at Permutive:

“Optimism beyond the pessimism is the underlying message of the latest IPA Bellwether report. We may not have seen total marketing budgets decline this fast since the global financial crisis, but these are extraordinary times. Coronavirus has put paid to a lot of activity this quarter, but many marketers expect it to pick up over the course of the year: ad spend might be down in 2020 but most expect recovery into 2021.

Whilst we understand the rush to cut budgets in the confusion of the immediate situation, history shows that those who spend through the bad times are better placed when better times return – as the IPA itself acknowledged last week through an ad campaign in the Financial Times. In fact, reaching your audience through trusted, premium environments such as the FT.com and its more consumer-focused counterparts is probably more important and effective than ever. Now is the right time to support them – for the future good health of your business and theirs.

“Where brands can, they need to invest in marketing”

Justin Taylor, Managing Director at Teads comments:

“The Bellweather is a fantastic report that, year on year, reveals the nuances in market that are difficult to see without the full picture. But this quarter, there are not a lot of secrets that we don’t collectively know. The only thing up for debate is how we all look to exit the crisis, whether it’s a gradual return to normal or if the lights come back on quickly and decisively.

“Our crystal balls are harder to see now we’re looking at them through our bedroom windows, so it’s fair to say the future is murkier than ever before. For now, all we can do is support our agency and brand partners to handle the crisis as best we can.”

We fully support the IPA’s ad campaign that, where brands can, they need to invest in marketing during difficult times. But for those who are feeling the effects of the downturn then that isn’t possible. So for businesses, brands and their teams alike – staying healthy is the ultimate priority.

“The industry today is better prepared for recovery”

Michael Nevins, CMO, Smart AdServer:

“The current crisis means companies have direct control over money going out, but not coming in. Many have therefore paused marketing spend to focus on what will generate revenue tomorrow, thinking only of the short-term, rather than 6-months down the line. This is very much a similar situation to what the industry saw after the 2008 stock market crash, during which the entire ad market declined by 13%.

“However, unlike with the financial crash, the industry today is better prepared for recovery – the IPA forecasts a +1.0% rise in ad spend following the crisis – and has a positive means by which to do so.”

Far from being a time to pause media spend, the industry must work to champion the independent publishers who uphold the media ecosystem and provide access to critical public service news. And part of that is a responsibility for advertisers to support quality British journalism at this time.

“Keep adapting … to meet shifting needs”

Ivan Ivanov, COO, PubGalaxy:

“As marketing budgets and ad spend are hit by the immediate impact of Covid-19, we’re already seeing the effects on digital publishers. For one-dimensional websites these will vary according to the verticals they operate within. While some might be currently experiencing a higher rate of ad campaigns in sectors such as gaming, tech and electronics, others will be suffering from reduced ad spend in tourism, hospitality and leisure, for example.”

However, success in 2020 for all-size publishers is going to depend on their ability to keep adapting advertising offerings to meet shifting needs. With ad revenue fluctuating, publishers need to access more stable sources; reconfiguring their programmatic setup can help.

There are channels — that operate on result-based marketing — that can be a safer option for maximising buyer returns during difficult times and by fine-tuning their supply to match demand-side trends, publishers can continue to find monetisation options to support them through the next stage of the crisis.

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