Advertising Digital Publishing
6 mins read

IPA Bellwether Q2 2018: The UK ad industry reacts

The latest IPA Bellwether report released last week shows that brand marketing budgets have increased again. Yet despite the consistent growth since Q4 2012, this last quarter saw the lowest increase since Q1 2016, an amber warning for publishers and brands alike.

The Q2 report pointed to a drive in digital advertising, with upward revisions to budgets matching the Q2 2017 nine and a half year peak. Search and SEO increased by 11% while mobile marketing remained at a similar level from the last quarter (-0.7%).

Key points:

  1. Budget growth remains modest but strengthens from Q1’s two-year low
  2. Internet marketing budgets revised higher to a noticeable degree
  3. Main media marketing budgets grow at the strongest pace in a year
  4. Company financial prospects remain positive
  5. Relatively soft adspend growth predicted for 2018 (1.1%)

Increased total marketing spend was supported by new product and service launches, overall business growth and increased optimism towards future opportunities. Furthermore, there were reports that increased competitiveness had driven firms to boost marketing in order to attract new clients and sustain market share.

However, whilst businesses maintained a positive outlook towards their own finances during the second quarter of 2018, confidence towards wider industry financial prospects was lacking amidst a recent softening in UK economic growth and the impasse in Brexit negotiations.

Joe Hayes, Economist at IHS Markit and author of the Bellwether Report, comments, “Despite the pickup in marketing budget growth, the latest pace remains weak and only slightly greater than Q1’s two-year low. That said, at a time when industry-wide financial prospects are deteriorating, the continued increase in advertising spend offers a positive development.”

So, what does the UK ad industry think about the latest report? We asked a number of leading ad executives how they viewed the latest Bellwether findings.

Eric Visser, CEO, and Founder, JustPremium

“Following Q1’s two-year low, it is heartening to see a strengthening in the latest Bellwether report, however modest. It’s important to consider the context surrounding these results; with the lingering presence of Brexit, the introduction of GDPR and generally tough macroeconomic conditions, this latest Bellwether is a testament to the UK advertising industry’s robust and solid foundations.

“It is pleasing – if unsurprising – to see that digital and internet ad spend are driving growth. Fundamentally there are two factors behind this growth; firstly the ever-increasing quality of what we are able to produce in online media and secondly, the appeal of clear metrics – such as viewability and in-view time – which better allow marketers to prove the ROI back to the business. Although as good as the 22.7% increase looks on the paper of a report – we as an industry must ensure that these increased budgets are not simply funnelled towards the tech giants.”

Anna Sampson, Insight and Strategy Director, Magnetic

“The latest Bellwether report provides some encouragement for those concerned about the perils of short-termism. The pressure on marketers to justify their ad spend in clearly quantifiable metrics remains unabated, with investment in digital showing the strongest growth. However, increases in investment in main media spend show an upsurge in commitment to media more dedicated to improving long-term brand and business performance. We know from our own research with Enders that there is a discrepancy between where consumers are spending their money and where ad spend is focused.

“An opportunity exists to tap into media environments aligned with passions. Enders analysis has revealed that 90+% of new discretionary consumer spend has come from “identity categories”.

They believe that advertisers should be investing adspend in media that strongly reflects social identity. If this consumer trend were better appreciated we might see some bigger shifts into quality content-rich media such as magazines and TV and less reliance on direct response led media such as Search.”

Andrew Buckman, Managing Director EMEA at Sublime Skinz 

“The upward revisions of digital advertising budgets is a positive sign during a time of economic uncertainty, specifically post-GDPR and pre-Brexit negotiations. The results from this quarter’s IPA Bellwether report has continued the trend of increasing marketing budgets, while overall budget growth remains slow.

“With high-profile events such as The World Cup taking place this year, it’s no surprise there has been an increase in big ticket campaigns on TV and radio, signaling that television is still an effective medium to build a brand. It’s really important to carry on that brand storytelling through other channels so that marketing messages are unified and consistent, and each brand interaction continues to take the user on a journey. Now more than ever, the marriage between data and creativity has never been so prevalent and as an industry we must continue to embrace this so that digital ad spend, and ROI, continues to increase.”

Andy Evans, CMO, Sovrn 

“It’s not a surprise to see that the market continues to grow modestly. With buyers spending more wisely, they are finding ways to make their budgets go further, plus the backdrop of GDPR has introduced some initial reluctance into the market.

What will become increasingly important are exchanges that have tight criteria and provide assurances around GDPR.”

Nick Morley, EMEA MD, Integral Ad Science (IAS)

“For me, the interesting insight from the Q2 2018 IPA Bellwether Report is that we are seeing a turning point for digital as brands increasingly understand the potential and value of online advertising. From ad fraud and viewability, through to brand safety, digital advertising has shifted focus from ensuring an ad was served to and seen by a human in a safe setting to whether that ad stood the chance of being effective. Continuing transparent practices are vital as marketers work to protect and grow their digital marketing efforts – getting verification metrics back to zero and increasing the value of their digital spend to develop a sustainable digital future.

“It’s also interesting to note that mobile advertising came in slightly lower than last quarter. However, with a focus on improving verification across many social platforms and walled gardens, this only evidences the industry’s drive to building a sustainable and transparent ecosystem across all platforms.”

Nick Welch, VP Business Development UK and Northern Europe, ADmantX

“It’s encouraging indeed to see continued growth within the industry. Advertisers clearly consider digital as a consistent and important component of their overall marketing strategy. However, while marketers assess the impact of GDPR, it’s clear ‘assumed’ or third-party behavioural data will suffer as projected ‘performance’ budgets are adjusted down. This creates a huge opportunity for those savvy publishers that utilise contextual understanding to differentiate their ad targeting service through the use of Natural Language Processing. GDPR has placed greater emphasis on the business case for contextual targeting, as it can be just as effective as behavioural data when used to drive performance for targeted ad campaigns. Publishers that gain consent from their audiences can leverage this data even further – applying real-time context as a proxy signal for interest allowing them to create valuable ‘audience’  profiles for advertisers to target. To be clear, data is not disappearing, it is simply entering a new epoch.”

Itamar Benedy, CEO, Glispa

“While it’s good to see that overall budgets are up this quarter, the slow growth rate and 0.7% drop in mobile advertising spend is unsurprising.

In our experience, the rise of in-app advertising is being hampered by a lack of new data sources and available inventory.

“Original Equipment Manufacturers (OEMs) offer a solution to this. Through the provision of a unique data supply and new ways to interact with consumers, OEMs pose a threat to the duopoly and consequently provide hope for a more diverse future. The opportunity of OEMs and the emergence of increasingly innovative and interactive ad formats, such as playables, are two distinct ways advertisers are driving greater user engagement. And as adoption of each increases, we expect mobile advertising to flourish.”

Adam Singolda, Founder and CEO, Taboola

“The findings of the recent Bellwether report reinforce the importance for a brand’s ability to place their message in a safe environment – something we are passionate about having already removed over 100,000 advertising URLs that we’ve identified as ‘racy’ this year. The increase in growth in Q2 illustrates the important role the open web plays in digital spending today as an alternative place for brands to spend their budgets, and I’m optimistic about the future.”

“Brands are now more than ever looking for scalable environments that are brand safe, and 100% transparent. I think the Bellwether report demonstrates that, as more and more of the industry focuses on creating these types of experiences, the budget will continue to follow.”


Our thanks to the above commentators for their views.

 Photo by James Padolsey on Unsplash