Interviews, insight & analysis on digital media & marketing

IPA Bellwether Report Q1 2021: Industry Reaction

UK marketing budgets were once again in decline at the start of this year as COVID-19-related struggles continued. Despite this, the downward movement wasn’t as severe as it’s been in the past and there is a strong belief that spend will recover over the next financial year, as the vaccine rollout and relaxing of lockdown restrictions continue.

To find out the consensus of the wider industry, we’ve gathered comment from a collection of Bluestripe Communications (owned by Bluestripe Group, owner of NDA) clients and other industry executives.  

Silke Zetzsche, Head of Commercial Partnerships, A Million Ads

“Despite budgets still falling, the report from Q1 shows a positive outlook on the year ahead as we see marketing budgets begin to recover. We are now seeing brands starting to move away from traditional ways of buying, planning and creating media and embrace a more strategic, dynamic approach. The Start-Stop-Change of the last year has really made the need for agility evident and every meeting I’m now in with clients, personalisation is being mentioned. Indeed, the combination of creativity and agility can give brands a positive outlook over the coming months as the advertising industry is recovering.

“As we gradually emerge from restrictions, the rules are in a constant state of flux. Moving forward, brands need to seize this opportunity to be as creative and savvy as possible, conveying to their audiences the most up to date information whilst continuing to connect with them on a personal level. By taking advantage of dynamic audio, brands will be able to react to the different stages of restrictions at a global, regional and local level and adapt their messaging accordingly. For instance, messaging on opening times or deliveries can be edited in real time, without having to rework the creative from scratch; saving money and connecting with consumers in one fell swoop.

“As Mark Read, WPP CEO, has said: we need to focus more on the creative message and experience.”

Greg Isbister, Founder and CEO, Blis

“As the UK starts to make a move to normality it’s positive to see that marketing budgets are slowing in their decline and client confidence is returning. While current restrictions have weighed heavy on some industries such as travel, retail and beauty, as they reopen investment in marketing budgets will most likely see a boost to meet pent up consumer demand. In fact, ‘COVID- proof’ industries are already seeing a return in buying confidence and, as we move further into 2021, consumer engagement is likely to increase as they look forward to a summer of freedom.

“Simultaneously however, our industry is at a major inflection point, as we pivot away from targeting based on IDs and personal data. In fact, our recent client survey revealed that 78% of senior marketers are concerned or very concerned by the loss of third-party cookies, whilst 61% felt the same about the disappearance of IDFAs.

“As a result, when brands begin to replenish their marketing budgets it is vital they work with partners that can find new ways to drive key business outcomes through personalised and high-performing digital advertising. Indeed, at Blis, we have been investing heavily in technology to reinvent location-powered advertising for a privacy-first world.”

Tim Geenen, Managing Director, Addressability Europe, LiveRamp

The stabilisation of marketing and ad spend this quarter points positively towards 2021 being earmarked as a year of expansion as industries reopen following the lockdown.

“However, it’s important to remember that it’s not only the pandemic that has impacted the industry in recent times; new privacy regulations continue to be implemented globally, the countdown to cookieless ticks on and Apple’s ATT’s framework is scheduled to materialise imminently.

“As a result, many marketers have migrated their strategies towards a more sustainable set of technologies. It’s no secret that third-party cookies are an imperfect solution, and marketers have used this period of upheaval to embrace the opportunity to transform the way they approach digital advertising once and for all.

“Sustainable solutions emphasize building first-party relationships with consumers—an ecosystem whereby consumers authenticate in exchange for trusted and valued engagements.

“Ultimately, marketers want to reach consumers based on authenticated identity attributes — supplied actively and with permission — which enables greater addressable reach, improved measurement, and better ROI.”

Justin Taylor, Managing Director UK, Teads

“The IPA Bellwether report reflects the cautious optimism that we have all felt this week. The fact that the first stage of the government’s plans has stuck to timings has buoyed the mood of the public, and we’ve seen hairdressers, retailers and hospitality venues all benefiting from that footfall. We’re confident that trend will continue.

“However, this confidence in ad spend is also due to the fact that businesses are now better prepared than ever for lockdown scenarios. So, if the rest of the government rollout is delayed, e-commerce, home delivery and virtual events will continue to grow and thrive. Brands have found new forms of creativity, engagement and planning to drive growth – whatever the scenario – so it makes sense that media spend is looking bright.

“It’s also great to see online budgets stabilising, with video returning to growth, showcasing its unfailing ability to drive consumer sentiment through medium to long term branding.”

Shumel Lais, Founder & CEO, Appsumer

“As cuts to marketing budgets ease in the first quarter of 2021, it is welcoming to see that online spending budgets have stabilised and video adspend has returned to growth.

“However, if you were to look at mobile as a standalone channel, we’d expect to see a completely different trend. According to Statista, consumers were spending 132 minutes daily on smartphones in 2019 compared to a projected 155 minutes this year. Indeed, our own mobile advertising benchmark report found that mobile ad spend actually recovered in Q3 2020 with overall spend increasing quarter on quarter by 53% with both gaming and non-gaming advertisers growing.

“Ultimately, ad spend follows consumer behaviour and we’ve already seen an increase in usage of mobile services such as D2C subscriptions, delivery services, exercise apps and gaming. It’s unlikely we should expect consumer habits to return to pre-Covid normality and as such we shouldn’t expect the advertising mix to either.

“That said, what’s going to be interesting is seeing how the industry reacts to the impending rollout of iOS14.5 and Apple’s App Tracking Transparency (ATT) framework. We predict this will likely drive shifts in the media mix of mobile app advertisers and our last snapshot of the Share of Wallet for mobile app advertisers found that Facebook likely has the most to lose from iOS 14.5.

“In the early days of ATT, app advertisers are likely to tread with caution and budgets could shift to Apple Search Ads and Android devices in the short-term for the security of known outcomes. To succeed in the coming months app advertisers will need to work with trusted partners that can compare, combine and enrich different data sources to get a complete performance view to then ensure campaigns are optimised accordingly.”

Karin Seymour, Client Strategy Director, News UK

“It’s hugely encouraging to see cuts to marketing budgets easing as we make our way through 2021. With less uncertainty expected in the macro environment, brands can begin to explore the consumer landscape as the economy opens up, so we expect to see a gradual improvement in ad spend throughout the year.

“One of the things that’s stood out during the pandemic is the public hunger for stories on how ordinary people have overcome adversity in these trying times. Whether it’s Captain Tom, our NHS and key worker heroes or local volunteer networks, it’s the human stories that have cut through and brought the country together. Brands should continue to share these stories and show what they are doing to support the country as we emerge from the pandemic. It is the human stories that connect with consumers who are looking for positive news in these difficult times.

“As coronavirus restrictions begin to lift, consumers will also be looking for excuses to spend. Brands need to be agile in order to flex strategy quickly and keep up with expanding demand, making sure their messaging is aligned with the current climate at all times. Brands should use the new environment to emotionally engage with their audience, on a human level.”

Claire Burgess, Director of Paid Media, Incubeta

“As the UK prepares to return to normal it’s incredibly positive to see that marketing budgets are slowing in decline. At Incubeta, we’ve already seen a high percentage of budgets return to normal across several industries as they prepare for the end of lockdown. While some sectors may take a little longer to return to normal due to the heavy impact of Covid-19such as Travel, Automotive and Beauty, we will hopefully start to see an incline in budgets as consumer confidence returns and restrictions are lifted.

“It is encouraging that marketers expect budgets to bounce back in 2021/2022, and that we are already seeing increased client confidence with increases in spend. However, as the world slowly returns to normal, the digital acceleration and innovation that has taken place over this past year will not be discarded. Instead, the investment in digital agility and adaptability will continue to work in parallel as the offline community returns.

“It will be important for advertisers to remain engaging and relevant while delivering brand messaging to its consumers. Now, there will be more competition from both online and offline, as restrictions ease continued investment in digital innovation and a data-driven, multi-channel attribution strategy will be crucial to grab customers’ attention.”

Justine O’Neill, Director, Analytic Partners

“While we’re not out of the woods just yet, The IPA Bellwether report offers a glimmer of hope for brands in 2021. One year into the pandemic brands have adapted to the new normal and markets are starting to stabilise. Cuts to UK marketing budgets and crisis planning have eased in the first quarter, showing signs of a more positive long-term outlook going forward. 

“With adspend budgets expected to recover in the next financial year, brands should begin shifting their focus to growth and efficiency over minimising exposure. Now is the time to build on the growing momentum and reinvest in tried and tested channels to optimise marketing efforts for a stronger second quarter.”

Richard Exon, Founder, Joint

“You can feel it in the air – the stirring of the long-predicted rebound. While these IPA Bellwether figures show that marketing budgets were still declining in the first quarter of this year, with the current easing of lockdown and many people’s pent-up demand, enforced savings to spend and joyous reengagement with the world, activity is returning to the economy. It looks like the next quarter will be much more positive and with the continuous vaccine rollout, the overall business outlook is getting brighter. These latest figures further support the quick recovery of ad spend with budgets back on track next financial year. And surely some sectors will benefit – personally I can’t wait for my first trip to a cinema, nothing beats the big screen experience when it comes to movies.”

Federica Bowman, Global CEO, Firm Decisions

“While we are not out of the woods, it does feel that a corner is being turned and the downward trajectory of marketing budgets is easing – with budgets likely to recover next financial year. This positive outlook for brands and agencies is very welcome as both can now focus on building marketing effectiveness in less challenging market conditions. 

“However, given the significant changes to budget last year across the marketing spectrum, it is important that brands take stock of what has happened in the last 12 months, evaluating how that money was managed and spent, to ensure that wastage was minimised and the best possible value was achieved. Although we’d all like to forget about the last year or so, it’s important that agency and marketing performance is evaluated and learnings are garnered, so as future budgets can be invested more wisely, in a consumer landscape that is arguably forever changed.”

Rik Moore, Head of Insight, Strategy and Planning, Kite Factory

“There is much to feel positive about in this report. Yes, there is still decline this quarter, but that is to be expected given the context of Lockdown 3. Within that “softer decline” story, the stabilisation of online spending plus video ad spending returning to growth suggest that advertisers had adapted to the necessities of advertising to a stuck-at-home audience, so were not taken by surprise in the latest lockdown. The impact of the vaccination programme breeds increasing faith in the roadmap forward. We are no longer peering into the unknown – instead we’re cautiously looking to a post-lockdown future, and this report clearly suggests that the optimism is building.”

Darren Savage, Chief Strategy Officer, Tribal Worldwide

“While we are still clearly in negative territory overall, Q1 saw a softening to cuts in UK marketing budgets in the first quarter of 2021, proving positivity is on the horizon.

“It will be interesting to see the extent to which changes to individual’s behaviours, attitudes, perceptions, and priorities observed over the previous 12 months become embedded in the long-term, and which revert back to those exhibited prior to the pandemic. Whilst many commentators are claiming large scale change is here to stay, it is important to acknowledge that much of this change was based on imposition, not choice, and that humans generally are afflicted with an unchanging mind.  As such it is important for brands to commit to research that examines what people are thinking and doing now, and track how these play out in the longer-term as the future plays out.”

Brian Kane, Chief Operating Officer, Sourcepoint

“While we’re not out of the woods yet, it is great to see an improvement in marketing spend. As the UK continues to ease lockdown restrictions and the population receive their vaccinations, we should see a gradual increase in investment. However, as the impact of COVID-19 begins to wane, the evolving privacy regulations and restrictions from big tech giants are putting further pressure on the ecosystem to adopt a privacy-first frame of mind.

“As budgets start to return it will be necessary for advertisers to ensure they are complying to the latest privacy regulations, but also improving the customer experience and streamlining their approach to consent. As privacy regulations continue to emerge around the world, the role of data ethics will continue to grow, and marketers will look to future-proof their strategies by going beyond compliance.

“Looking ahead, I am optimistic about the future despite the upcoming challenges. Our industry is incredibly robust and capable of adapting to big changes. This new privacy landscape where persistent IDs and third-party cookies are no longer guaranteed will be a steep learning curve for all. However, if we collaborate and continue to invest in media and new technologies, we can build a compliant and privacy-first tomorrow.”