The ongoing dip in business revenue continued to impact marketing budgets in Q3 2020, according to the latest IPA Bellwether report. The marketing sector is still feeling the consequences of the pandemic with budget allocations remaining on the decline, placing pressure on publishers and advertisers alike, but the downturn appears to be slowing. As a result, forecasts predict spend to bounce back in 2021.
WNIP touched base with ten industry experts, to gain insight into how heightened consumer understanding, savvy media investments, and pursuing innovation can boost the recovery of even the most affected marketing categories.
A glimmer of hope for events
Social distancing measures have caused severe repercussions for live events – more than 64% of all companies cited downward revisions to their event budgets. The pressure on spend, however, is sparking a digital revolution in a traditional space. Rayhan Perera, CEO and Founder at OneDash commented: “It’s no surprise events remain the hardest-hit type of advertising. However, it’s unwise for brands to completely pull back their marketing investments in this area, particularly when the shift to digital is likely to become a permanent feature of expos, conferences, and shows.
“Instead, brands should be experimenting with what online events can do for them; embracing digital as a lucrative alternative for promotion, and exploring how interactive technology can boost personalisation and audience engagement, despite the lack of physical contact. For example, incorporating “shoppable” features for online runway shows and product launches.”
Reconnecting with the consumer
In a bid to restart growth, businesses are prioritising marketing efforts that rebuild relationships with customer bases. Media owners occupy a unique position in this context, due to the wealth of audience data they have to offer. Alvaro Megias, Global Project Manager at Audiencerate commented: “It is critical that marketers continue preparations for a recovery of macro economic conditions in 2021 and, in doing so, strengthen their data monetisation strategies with hyper-targeted data that can be used to reach and engage audiences that best match their needs, in the fastest times possible, helping to deliver more impactful and competitive campaigns.”
Additionally, Chris Hogg, Managing Director EMEA at Lotame spoke of the role identity will play in the future of audience engagement: “The rest of the year remains a pivotal one for marketers looking to gain a competitive advantage in 2021, and it will be those who adopt a people-based, privacy-focused and open-to-all approach to identity that will have the most success in creating new opportunities for brands and publishers to reach their desired audiences.”
Renewed focus on efficiency and trust
One outcome of the downturn in ad spend is also expected to be media buyers’ greater need for streamlined, cost-effective operations and accountability. Pierce Cook-Anderson, Managing Director UK & NL at Smart AdServer commented: “With budgets tight, we’re seeing buyers move towards private marketplaces as they seek to reduce wastage and increase the return on their media investments. With financial and operational efficiency of the utmost importance amid continued uncertainty, it’s likely the industry will continue to see demand and supply move closer together, with media buying becoming more direct, transparent, and accountable.
This shift is fuelled in part by growing discontent for the untrustworthy practices of larger tech giants, with industry players demonstrating a desire to partner with more independent alternatives moving forwards.”Pierce Cook-Anderson, Managing Director UK & NL at Smart AdServer
Performance is key
Emily Brewer, Head of Publishing, Teads, added that there would be an increase in focus on performance, “Despite the negative sentiment of the report, we are remaining positive on prospects for Q4 2020 and growth leading into 2021. Brand priorities have changed from Q2 to Q3 with a significant increase in uptake for performance over brand advertising.
“As consumers rely more heavily on online for news, brands are looking to take advantage of increased readership and have moved to premium publishers, where they can guarantee a responsible advertising approach. Furthermore, the move for publishers to embrace or accept lower funnel offerings has allowed them to maintain revenues with top brands, which in turn has helped them to navigate Q3, and look to compete at a greater level with social platforms.”
The need to focus on ‘performance’ was also a theme taken up by Max Flajsner, Director of Innovation, Incubeta, who adds, “Brands will need further support from tech platforms, agencies and media owners to adapt to new and flexible ways of working. Performance-based models in which partners are willing to take shared ownership of risk will be required to help advertisers stay active in the market.”
Ben Barokas, Sourcepoint, echoed the overall optimism, but added a word of warning for publishers, “Although website traffic is skyrocketing due to restricted movements and isolation, publisher revenue has continued to contract. So, it is likely we will see a trend for publishers to begin experimenting with ‘consent or subscribe’ experiences to help them survive, as ad budgets continue to shrink. In short, publishers must diversify how they generate revenue streams beyond advertising.”
Room for a positive outlook
Despite the challenges faced throughout 2020, current forecasts leave room for optimism when looking ahead, with ad spend predicted to grow 11.3% in the coming year. Reflecting on COVID’s impact on the industry, Victoria Usher, Founder and CEO at GingerMay commented: “While the pandemic created daunting statistics for many businesses and caused mayhem in 2020, I am excited for what the future holds. Business leaders across advertising and marketing were forced to think and act like entrepreneurs, striving to overcome challenges by creating new solutions that will ultimately become the foundation for a more innovative and agile sector.”
Not everyone is convinced
However, not everyone is convinced that a sharp recovering is incoming. Sanjay Nazerali, Global Managing Director & Chief Strategist at Dentsu X says, “There will be no “recovery” as such, instead we will see a metamorphosis within the industry. The changes in consumer behaviour we are witnessing are movements, not trends, which have emerged and become cemented during the pandemic.”
Many people have discovered a “return to self”, with an inward focus on their families and communities.Sanjay Nazerali, Global Managing Director & Chief Strategist at Dentsu X
“As further restrictions are put in place it will be businesses who have bucked the trend and reinvented themselves, both online and off, that will succeed during these adverse times. This new attitude won’t be easily reversed, even when advertising levels grow and stabilise. Instead there will have to be new ways of operating to reach and interact with consumers.
“So, while we will certainly see a return to growth in marketing spend come 2021, I believe the nature of how marketing is conducted will have to drastically change.”
Nazerali could be right – if 2020 has taught us anything, it’s that change can come from the most unforeseen and unexpected quarters. What remains to be seen is just how long-lasting the effects could be.
Perhaps the last word should go to Vihan Sharma, Managing Director Europe at LiveRamp, “Covid may have pushed the marketing industry into uncertain territory, but it’s also provided an accelerant to meaningful change by creating an urgent opportunity for marketers to explore fresh engagement strategies that offer improved targeting and a greater value exchange – all while protecting consumer privacy.”