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The latest IPA Bellwether report released last week marks the first time in seven years that total marketing budgets have taken a cut in the UK. Born out of uncertainty surrounding Brexit, a net balance of -0.5% of firms registered downward revisions to their total marketing budgets during the third quarter; differing only slightly from Q2 where growth remained flat (+0.0%).
Key points from the report include:
- Slight contraction in total marketing budgets in Q3 as firms look to keep tight control over expenditure
- Economic and political uncertainty lead to indecisiveness and hesitancy among UK businesses
- Firms re-adjust budgets to allow sustained growth in digital marketing space
- Own-company and industry-wide financial prospects remain deeply negative
- Ad spend to grow marginally in 2019, but improvements forecast for 2020 and beyond
Despite current negative sentiment, the findings suggest businesses will be keen to accelerate marketing efforts as soon as the uncertainty has cleared – predicting an upward turn in ad spend for 2020 as a result.
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.
Oli Marlow-Thomas, Founder & CEO, Ad-Lib Digital
“With marketing budgets continuing to struggle through 2019 it’s time for the industry to make some changes to the way it manages ad spend. One obvious budget black hole is the sunken cost of digital creative. The expensive development of creative assets across multiple digital channels and formats means costs rack up with each and every iteration. By automating the process of personalised creative, budget-conscious marketers can save vast sums on production costs, and reap a huge time saving too.”
Bill Swanson, VP EMEA, Telaria
“In an overall uncertain market, it’s encouraging to see digital marketing budgets reporting an increase. As consumers continue to shift away from traditional/linear television to viewing on multiple platforms, the industry recognises that this is a priority focus for ad spend.
“This is also reflected in the IAB UK’s half year Adspend update, with UK digital ad spend up 13% year on year. With the correct approach to monetisation and with budgets in the right place, marketers can seize the benefits this sector will continue to bring.”
Christian Gladwell, Global CEO, M&C Saatchi Performance
“Whilst total marketing budgets reduced slightly in Q3, almost two-thirds (64.1%) of marketers reported no change in overall advertising investment and budgets continued to shift from traditional to digital. Couple these findings with the IAB UK’s half year Adspend update, which reports that total UK digital ad spend was up 13% year on year in the first six months of 2019, driven by display (video) and search and you have a more positive outlook for digital advertising.
“Brands understanding that mobile is now more than simply a device will be key to continued digital advertising growth. With increasing touchpoints, joining the dots between all digital platforms to engage the connected consumer will become ever more relevant for brands. Addressing the connected attribution issue will be key to sustaining consumer growth and the associated digital ad spend.”
Alexander Iglesböck, CEO, Adverity
“Overall the report may appear negative, however we shouldn’t overlook the small nugget of positivity, which suggests there is budget growth (+11.1%) in online marketing spend. It is great to see an advantageous shift towards digital marketing, with organisations redirecting their marketing budgets towards new data tools and investing in data driven marketing.
“Moving into the final quarter of the year I would expect to see increased investment in the online and digital marketing sectors, especially as marketers continue to comprehend data’s true value and power. ”
Jeff Pfefferkorn, Head of UK Sales, MainAd
“The cautious approach to marketing budgets in the UK in the last quarter comes as no surprise in the current climate of uncertainty; but brands will need to be bolder and diversify their strategies once the political turmoil is finally resolved if they want to stand out from the crowd.
“The move towards social media advertising also presents a different opportunity for brands to engage with users, and suggests that many marketers are following the DTC ecommerce model and interacting in a more direct and personal way with consumers.”
Philip Acton, UK Country Manager, Adform
“These results reflect a natural element of uncertainty stemming from the current political and economic tensions at play in the UK. We actually see a strong opportunity for the market to focus on greater collaboration, and to use that as a springboard for industry-wide innovation. The past year has definitely seen a heavy increase in focus on transparency among budget holders which has had a knock-on effect impacting when and where those budgets are allocated.
“The digital advertising industry must provide both brands and publishers with integrated advertising solutions that ensure accountability throughout the purchase chain. This includes adoption of new neutral standards that support the handling of sensitive data whilst striking a healthy balance between delivering value and a better experience for the end consumer.”
Christopher Hogg, Managing Director, EMEA, Lotame
“Firms readjusting budgets to allow sustained growth in digital marketing might be an indication that marketers are embracing data-driven strategies to prove ROI. Those activities that aren’t showing genuine gains are being cut. It’s time for marketers to double down on high quality data, and the partners who can help them connect their disparate data resources and activate their data solutions to acquire and engage their audiences more effectively.”
Giovanni Strocchi, CEO, ADmantX comments:
“As expected from the beginning of the year, Brexit uncertainties have created a cautious approach for brands towards marketing spending. The good news, however, is that spend within digital is on the rise, once more demonstrating its position as the core component of any marketing strategy.
“But moving forward, there will be some changes in digital spending following GDPR and browsers’ new policies on 3rd party cookies. There is also growing attention to brand care and brand suitability. As a result, contextual advertising in its most intelligent form, which is based on NLU (Natural Language Understanding) and the activation of 1st party data from publishers will be increasingly important for brands.”
Justin Taylor, UK MD, Teads comments:
“The latest IPA Bellwether Report is reflective of a turbulent year where the UK has been in a constant state of uncertainty. With 31st October deadline looming the industry now needs a firm resolution and direction from the Government to empower brands and marketers with the directional confidence to keep spending.”
“That said, it’s positive to see that there is a continued shift towards digital marketing as well as data-driven campaigns. Quality publishers, screen specific solutions and guaranteed outcomes will grow in importance as advertisers look to the value of context over scale at any price, whilst media owners are increasingly wanting ways to leverage their first-party audience data effectively.”
