Interviews, insight & analysis on digital media & marketing

IPA Bellwether Report Q2 2022: Industry Reaction (part two)

More comments on the latest IPA Bellwether Report from marketing experts across the industry, including Bluestripe Communications (owned by Bluestripe Group, owner of NDA) clients and other industry executives. Part one can be read here.

Andrew Stephenson, Director of Marketing EMEA, Treasure Data

“Efficiency will be the name of the game for marketers digesting today’s IPA Bellwether report, while staring down budget cuts, rising costs and an increasingly likely recession.

“The recent government campaign to divert marketing budgets in favour of price cuts for consumers neatly summarises the battle marketers face in proving their value-add. But marketers know that building brand loyalty – particularly during a time of economic downturn – will significantly help businesses weather the coming storm.

“Marketers, therefore, have a distinct opportunity to prove their worth against a backdrop of cynicism and scrutiny. Loyalty can be earned by providing a frictionless experience and pre-empting customer needs, but to do this effectively, marketers must have the tools and skills to collect and connect customer data to achieve full visibility of the customer journey.

“A robust data management strategy will be critical to this; unlocking deeper connections with consumers, while delivering the efficiencies needed to insulate against budget cuts.”

Paul Coggins, CEO and Co-Founder, Adludio

“While the forecasts from this IPA Bellwether are understandably deflated by recent economic uncertainty, it is clear from the resilient growth figures for online marketing that there is still a hunger for digital transformation. Indeed, the experience of the past few years has solidified digital as a stable source of revenue. However, with a reduction in ad spend predicted, coupled with an already saturated market, it is now more important than ever that brands are cutting through the noise and maximising attention with the best possible creative.” 

“In mobile, where we spend most of our digital lives, channelling budgets toward new, innovative technologies can help boost campaign engagement. In particular, those which use AI-based algorithms, leveraging interactivity and historical creative data, can shift targeting away from third-party data and social demographics toward a much more effective approach built on first-party behavioural data. This can then be used to more accurately target audiences. Additionally, as this data is anonymised, it complies with the privacy-first future of media buying. As we enter a potentially difficult economic period, having ad campaigns that forge these meaningful connections between brand and consumer will be imperative to protecting revenue streams.”

Anastasia Leng, CEO and Founder, CreativeX

“Inflation. Layoffs. Recession. They’re words we’re getting tired of hearing, but it seems we’re not hearing them enough. The latest IPA Bellwether report contains some encouraging news thanks to sustained budget growth, but that only highlights half the picture: in real terms, today’s marketing budget has about 80% of the spending power it did when it was first agreed upon late last year– leaving marketers grappling with pressures to do more with less.

“There’s tremendous talk of cutting costs and cutting teams, but those changes won’t fix the entire problem: they’re symptoms, and not the disease. A leaky bucket with less water still leaks, and marketers still carry around tremendous inefficiency in how they operate. For example, while much of their budgets go towards image and video ads, the Creative Quality Score (CQS – a metric used to measure content effectiveness by tracking the incorporation of platform best practices) of those ads is incredibly low: the average CQS is 28%, which means over 70% of creative work is inefficient – this can mean millions in wasted advertising spend.

“Budget increases are indeed positive news, but they can mask the problem, which is not the size of the budget, but its ability to deliver our desired results. Brands like Nestle are already reaping the rewards from making their budget go further, with the food and beverage giant reporting a 66% boost on its Return On Ad Spend (ROAS) through unlocking creative data. Recessions are undoubtedly painful, but they’re moments of opportunity to make our processes and ways of working more resilient, and those changes will yield ROI for years to come.”

Mateusz Jędrocha, Head of Upper Funnel Solutions Development, RTB House

“It is promising to see that video ad spend has grown by 8% in the latest IPA Bellwether report. However, there is still a common misconception that the number of views a video gets can be regarded as a key metric of success. The reality is that success is determined by targeting consumers receiving the right content at the right time. And thankfully, the latest innovations in ad tech is allowing advertisers to do just this.

“Deep Learning, or advanced artificial intelligence (AI), for example, is the most advanced AI set of algorithms and is capable of understanding human decisions with an unprecedented level of precision predicting future actions based on online behaviour. 

“For video campaigns, Deep Learning can make a huge difference in gaining attention in an efficient way. Through real-time predictions, Deep Learning is able to pick the right time, place, message and audience, which in turn enables advertisers to improve the customer journey and create the most effective video advertising strategy. By doing so, advertisers can increase their brand’s visibility whilst also maximising the value of each ad impression.”

Jeremy Hine, CEO, MullenLowe Group UK

“With inflation hitting a 40-year-high as the cost-of-living crisis deepens, it’s unsurprising to see business leaders approach their future financial prospects with caution.

With lower- and middle-income groups being impacted the most during this coming recession, brands that have an in-depth understanding of their customer groups will be much better placed to withstand the upcoming economic challenges. Those that aren’t prepared or simply not geared up to monitor these inevitable changes in consumer behaviours will struggle.

“Most importantly, brands must tread carefully with their upcoming communications and avoid appearing out of touch. Those that are seen to be working for the benefit of their consumers will no-doubt be looked upon more favourably, and the creative industry has a responsibility to support them with that. Above all, it is imperative that we work together to battle through what will certainly be stormy waters over the coming months.”

Hunain Khan, Director – Programmatic CTV Supply Lead, Xandr

“The growing popularity of digital video is reflected in Q2’s IPA Bellwether as video related marketing spend increased for a second consecutive quarter.

“This is because with consumer privacy top-of-mind for advertisers and media owners, the digital video landscape offers an appealing environment to operate in. Media owners often have consented, exclusive insight into what their audience is watching, when and how often. This data is essential for buyers and can be effectively wrapped and sold in a privacy-compliant way by the owners. 

“Moving forward, buyers will be increasingly placing greater emphasis on supply path optimisation (SPO) strategies, such as private marketplaces or curated marketplaces to put them in more control and provide more transparency. It will therefore be crucial to strengthen the relationship between buyers and sellers, where marketers can agree upon a strategy that works for them and their unique goals.”

Emma CranstonClient Services Director, The Ozone Project

“The past quarter has seen numerous pressures bear down on marketing investment; from the ongoing conflict in Ukraine to rising inflation, soaring energy bills and their combined impact on the overall cost of living. With advertising budgets coming under more pressure than ever, our customers are telling us that quality, result-driven and easy to deploy media is more critical than ever. And while this latest report indicates a steep slowdown in digital spending, at Ozone we have actually seen the opposite – continued, strong growth from advertisers looking to invest in premium, highly engaging environments. This is largely down to the essential role that premium content plays in helping consumers navigate the challenges presented by issues that are largely outside of their control. As we saw during the pandemic, the public seek out advice and information from expert voices and we consistently see that in our own data – e.g. an 8% year on year increase in consumption of Financial Assistance content, despite last year encompassing the furlough extension period. With the near-term outlook increasingly uncertain, brands will be looking to premium publishers to reassure their customers in the short-term, while also building brand equity for the mid to long-term.”

Justin Taylor, UK MD, Teads

“Following the impressive growth predicted last quarter – with the mounting challenges like the war in Ukraine, the energy crisis and continued disruption to supply chains – it was somewhat inevitable that the latest IPA Bellwether would scale back its forecasts in Q2. The net expansion of marketing budgets despite these problems is a testament to the industry’s resilient sense of optimism post-pandemic. Nevertheless, maintaining upward momentum in the face of reduced ad spend will require a balance of proven partners alongside new ways of approaching scale and effectiveness.

“As consumers tighten their belts in the face of these economic issues, as well as recent political developments, media as a source of news, advice and community will be relied on heavily. Advertisers who continue their support of ad-funded media sites, in high-attention environments with impactful creative will continue to see meaningful business results through this period of turbulence.”

 Tom Buttle, Managing Director – London, MikeWorldWide

“The IPA Bellwether report delivers a couple of revealing trends. Firstly, it shows that the desire for people to connect isn’t just ‘post-lockdown’ chit chat; it’s an actionable, marketable sentiment and event spend is up because of this. But secondly, PR is the only other Bellwether category to show growth. This is because PR is an interpersonal, storytelling discipline – and in the current socio-economic climate the value of this to brands is significant.  We’re in an era where caring has become a powerful form of currency, so you have to be objective and authentic to get your story over the line. This makes PR an effective way for businesses to show up, and to create advocates from their audiences. So, at the same time that digital is helping us all market smarter and faster, PR’s intangible human quality has become worth investing in.”

Vihan Sharma, Executive Vice President Global Sales and MD of Europe, LiveRamp

“Despite the difficult economic climate, the resilience of online advertising budgets indicated by this quarter’s IPA Bellwether is encouraging. As the industry continues to embrace cookieless technology, it is likely that smart digital marketers will now be thinking about long term strategies which are underpinned by addressability.

“Indeed, the privacy-centric, first party future is here, and already publishers and marketers are utilising new addressable solutions to achieve more accurate measurement and audience reach far beyond the capabilities of third-party cookies. 

“Bolstered by closer collaboration, first-party addressability is promoting democratisation across the digital marketing ecosystem and, as media investment is diverted more toward the Open Web, a way of working with and beyond the walled gardens.   

“Delivering true people-based marketing will not only restore the value exchange between brands and their audiences, it promises greater return-on-spend and the chance for publishers, platforms and advertisers to take back control of their revenues.”

Gareth Davies, Senior Vice President at MikeWorldWide

“As we head into a potential market down-turn, it is concerning that the industry is already showing a slow-down in spending and that many businesses are already taking a negative outlook on future business performance. If the pandemic has taught us anything, it is that brands need to be showing that they care more than ever before. We know that audiences are increasingly making decisions on the products and services that they use, buy or consume based on how a brand behaves and how it cares for those in its world. So therefore, at times of great instability, brands can benefit by showing their customers and stakeholders that they are a force for good. But this requires investment in more purpose led storytelling across all channels. Whilst it has been good to see that PR spend has been one of the only categories not to see a negative downturn in spend, particularly because it is one of the most effective ways to turn audiences into advocates, brands need to ensure they are delivering a surround sound story to their audiences. This requires investment across other channels to support and amplify the PR messaging but to also reach and engage with audiences where they currently engage.”

Andrew Turner, Chief Revenue Officer, Incubeta

“After the confident forecasts of Q1, a reassessment of growth was unavoidable given the current economic and political situation. Nevertheless, with digital budgets remaining relatively buoyant even in the face of these big challenges, it is clear that online will remain a key part of the marketing toolkit for 2022.   

“Additionally, the return of event budgets is a further sign that offline marketing is recovering post-pandemic and it is clear that consumers are throwing themselves back into in-person activities. Particularly encouraging is the growth of those sectors which were hard-hit by Covid, including Travel, Entertainment and Hospitality. 

“However, businesses need to optimise their omnichannel experiences, and ensure that these marketing budgets, which remain resilient for the time being, are carefully divided across the right channels.”

Julie Lock, Senior Manager, UK&I Marketing, HubSpot

“It is encouraging to see that marketing budgets have somewhat bounced back, but with the emergence of external pressures surrounding the UK’s economy, ad spend has taken a hit.

“However, with smaller ad budget comes the opportunity for stronger, punchier ways of marketing, and so it is a case of identifying where businesses believe their biggest impact will be. Performance goals must be set to drive growth and prevent loss of traction and it is important to tap into a more specified area, as always, it’s quality, not quantity.”

“It is vital that customer interactions are kept front of mind for business strategies as this is where authenticity comes in. Customer engagement is undoubtedly the backbone of a business but with a constantly changing world, it becomes increasingly difficult to garner their attention. It is important to focus on existing customers – ensuring these have a solid relationship before building new ones. Considering original ways of engaging with your customer or auditing current ones is key and elements such as blogging, calls to action and SEO all generate traffic. If the above is implemented well, then brands will thrive despite a reduction in their ad spend.”

Gavin Stirrat, CEO, Adimo

“It’s no surprise that the current economic climate in the UK has affected ad spend forecasts. Rising living costs will affect almost everyone and every business, and I believe that part of our recovery is acknowledging that situation and amending our business strategies in order to thrive.

“If we look at the media landscape before the unexpected downturn, particularly at traditional media, TV marketing budgets came to a standstill for the first time in a year. However, before the blanket slow down, budgets for online media grew by over 14% – an encouraging figure – and one that shows promise and direction as to where brands are, and should be, investing.

“Whether an organisation’s business strategy during these tough times is to stand their ground and increase their budget, or to prioritise supporting customers, the fact of the matter is that they need to do something. It’s not enough to hope to ride out the wave – at the moment, agility and adaptation is key. Only then can we begin to see promising growth figures again.”

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