Interviews, insight & analysis on digital media & marketing

IPA Bellwether Report Q3 2023: Industry Reaction (part one)

The latest IPA Bellwether Report showed that UK marketing budgets continue to grow in the face of economic pressure. However, pessimism remains around the future prospects.

Here’s what leading voices from across the industry make of the report.

Josh Krichefski, EMEA & UK CEO of GroupM and IPA President

“Given another turbulent year for the UK economy, it’s not surprising that ad spend is forecasted to fall in real terms until 2025 – and while it’s a prediction I hope brands can reverse, it’s important that marketers understand their biggest opportunities first and foremost. Often, advertising is seen as an additional cost when it should really be seen as an investment into future success. Inflationary pressures won’t last forever and the brands that will be best positioned to capitalise when the economy eventually improves will be the ones that laid the foundations in the lead up – that means now.

“Keeping one’s powder dry in the short-term may cut costs but ultimately, it’s a matter of either investing now or spending money playing catch-up. It’s worth remembering that some brands will likely opt for the latter, so there’s more space to cut through the crowd. Advertising that connects with real human emotions will always be effective, regardless of economic circumstances.”

Hugh Stevens, Managing Director UK, at LiveRamp

“It is encouraging to see the trend identified last quarter, of more brands expanding marketing budgets in the face of economic pressure, has gained momentum in Q3. This reflects our own research carried out earlier this year into the key priorities of senior UK marketers. Moreover, following a rise in sales promotions spending in Q2, the reduction of such activity this quarter, in favour of activity in ‘main media advertising’, shows that marketers are reacknowledging the importance of brand value for longer-term business health.

“Nevertheless, with consumer income squeezed heading into Q4 coupled with a projected drop in adspend in 2024, marketers, especially among retail brands, must ensure that they are taking this strategic view across the board. This includes investing in data technologies. Of particular note are those which drive efficiencies across media plans, to ensure budget is being optimised and directed towards responsive audiences, and provide transparency and closed loop-measurement across the evolving customer journey via a strong, first-party data foundation.

“Having this data presents a significant opportunity and competitive advantage in better understanding who their customers are, their interests, and how to utilise this across their broader marketing strategies. Brands who have adopted this approach also have the choice to collaborate with partners, whether that’s other brands or third-party data partners, to enhance their own customer intelligence and build activation plans that will reach people in the right mindset to buy. Harnessed correctly, this presents a key tool for marketers navigating the next quarter and beyond.”

Richard Kelly, Chief Solutions Officer, Mindshare UK

“This report suggests that advertisers and agencies have adapted their playbooks to navigate a persistent economic downturn, in contrast to the more typical recessions followed by recovery cycles we’ve witnessed in the past. With the economic outlook remaining challenging for the foreseeable future, it’s encouraging to see brands prioritising long-term growth over shorter-term cost savings. As we approach the run-up to Christmas, it becomes more crucial than ever for brands to craft messages that are empathetic and resonate with the public to drive positive growth during what could be a challenging winter for many.”

Anna Forbes, UK Country Manager at Azerion

“In recent months, advertisers have faced significant challenges, including the rising cost of living, navigating geopolitical instability, and adapting to shorter attention spans from consumers. So, it’s encouraging to see that main media marketing spend has risen, signalling an optimistic end to the year. 

“However, securing a competitive edge in tough times means focusing efforts on reliable partners who can deliver tangible results with the utmost efficiency. With a heightened demand for advertising campaigns to deliver strong results, advertisers have had to seek more streamlined methods to achieve their campaign objectives. This shift in priorities has highlighted the importance of attention, a metric that has always been a crucial yet intricate aspect of advertising.

“To sustain the growth of media spending in the upcoming year, advertisers should consider full funnel brand performance solutions, with attention at the heart, to effectively navigate the ever-changing landscape.” 

Nicole Lonsdale, Chief Client Officer, Kinetic Worldwide

“Official Out of Home revenue figures and forecasts paint a different picture to this latest report. The outlook for the sector is robust with revenues up year-on-year and quarter-on-quarter. The sector has worked hard to return to 2019 spending levels and our primary focus is now about reclaiming % share of budgets. To achieve this, we need to intensify efforts to explain OOH’s role as a strong awareness and brand builder, as well as its newer benefits of driving consideration and purchase made possible through smart data and automation that offer brands real-time opportunities to influence consumer behaviour. And when you consider that 60% of online purchases are now made outside of the home, OOH is a powerful channel that advertisers should be including on more advertising campaigns.”

Matt Nash, UK MD at Scibids

“Despite a pessimistic economic outlook, this Bellwether gives reason to be optimistic in the fact that online marketing budgets remain buoyant, and are clearly being prioritised as a key driver of business growth. This bolstered confidence is likely thanks to AI, which the IPA has identified as an area of strategic investment. This aligns with the findings of our own survey earlier this year, which reported that 87% of UK brand marketers view AI as an important component of their media plans. Nevertheless, with many brands looking to seize the opportunity of others retrenching spend, it is critical that they invest in the right types of technology that can cut through the noise. 

“Marketing teams which are prioritising investment in AI and customisable bidding in optimising campaigns will unlock particular value. Capable of ingesting demand-side platform (DSP) log data as well as first- and third-party sources, these can drive bespoke metrics in programmatically-bought media, including attention and return on ad spend (ROAS). Media buying teams who are engaging these smart solutions will gain the upper hand in ROI into Q4 and 2024.”

Nicole Kivel, Managing Director, Northern Europe at Criteo

“The reduction in sales promotions budgets is certainly notable as we approach retail’s Golden Quarter. Further upward revision to other online marketing budgets suggests a positive shift towards thinking about brand and top of funnel, focusing on how marketers are reaching and engaging new-to-brand audiences.

“However, this must be balanced with active participation in the upcoming sales events. This year will feel even more competitive and without campaigns out there for audiences to engage with, brands run the risk of getting lost in the noise and losing out on one of the most important revenue opportunities of the year.

“In fact, our recent study of UK retailers during the recent October Prime Days found that participating retailers saw a 42% increase in sales, but those that didn’t saw an 11% decrease. This speaks to the importance of a full-funnel mindset in planning campaigns for the year ahead, championing long-term strategies versus short-term wins.”

Clara De Rosa, Head of Customer Success at Adform

“The UK’s economic environment is clearly facing significant challenges, both domestic and global, and with a recession likely as per the report’s finding. However, in the face of these obstacles, the report highlights that many companies are showing a forward-thinking approach. This includes bolstering marketing budgets, making strategic investments in cutting-edge technologies and taking proactive measures towards sustainability goals.”

“This is encouraging, but in order to maximise the efficiency of adspend in this dynamic arena, marketers must ensure they are taking this approach with their partners, particularly those who can support with omnichannel strategies. This adaptability and expertise will prove crucial as brands look to capitalise on others’ retrenching ad spending in Q4 and beyond.”

Elizabeth Brennan, GM for advertisers at Permutive

“It’s positive to see marketing budgets expanded in Q3. However, as we move into the biggest shopping period of the year, the most important thing is that brands are getting the best return on their investment. Particularly as capturing the attention of cash-strapped consumers is no mean feat. 

“To ensure the most successful Q4 sales period, advertisers need to reach all potential audiences. Yet with only 30% of consumers addressable within the open marketplace, this is easier said than done. Getting in front of 100% of target consumers is possible, it simply requires a change of approach. 

“Instead of focusing on the status quo of current programmatic buying methods, brands should take this opportunity to drive incremental reach to consumers across all browsers and in all environments, by forming more direct pathways into reputable Publishers. This will allow them to tap into publishers’ highly valuable first-party data and reach previously unaddressable audiences at scale, while remaining completely privacy-safe.”  

Matt White, VP EMEA at Quantcast

“While forecasts suggest it’s a matter of time until the UK enters into a recession, the UK continues to enjoy high employment which is the bedrock of the economy and consumer spending. This is why it’s unsurprising the latest IPA Bellwether figures show further increases in ad spend, with marketing teams continuing to invest to increase market share when times are tough.

“Q3 ad spend was boosted by major sporting events too. The Women’s World Cup was a resounding success, with the Lionesses’ journey to the final making advertising space a hot commodity. Our data actually showed 17.4m addressable devices engaged with the tournament prior to the final, resulting in a 254% increase in addressable advertising audience. Marketing teams will have invested heavily ahead of the Rugby World Cup, which started at the tail end of Q3, providing yet another boost for the quarter.

“Looking ahead, it’s safe to say another increase is on the way, as we enter the peak for retailers, with Prime Day, Black Friday and then Christmas providing the perfect storm for advertisers. We’re only a few weeks into October and we’re already seeing our clients increasing marketing spend – expect to see that continue over the coming months.”

Julia Bielecka-Dąbrowska, Head of Sales Development & Efficiency at RTB House

“While short-term promotions were a highlighted focus last quarter, this report’s findings suggest a move towards long-term brand building. This will undoubtedly increase competition in an already challenging market. As we enter the busiest shopping period of the year, with Black Friday and Christmas proving key moments on the consumer spending calendar, brands need to manage their budget wisely. While brand awareness will be important, driving results will remain the priority.  Consumers have to be targeted in the right moment, the solution to which are personalised ads that can cut through – AI and deep learning technology allows marketers to maximise this potential. Taking this approach, marketers can benefit from performance results while keeping their brand front of mind.” 

Rachel Macey, Head of TGI Agency Partnerships at Kantar Media

“Our latest Great Britain TGI data shows that audio and out of home (OOH) are holding up well in terms of audience engagement.  83% of all British adults claim to listen to radio and 28% say they listen to podcasts once a week.  42% of adults are likely to notice OOH advertising when travelling, and for 17%, OOH advertising improves their perception of the brand.

“None of these figures have seen any meaningful decline in recent months or years and some have seen rises, so it’s interesting to see that spend has been pulled back on these.  Of course, we also know the value of being forensic in identifying target audiences for campaigns and it could be that marketers are pinpointing specific consumer groups in other areas.  The cost-of-living crisis is dramatically reshaping people’s behaviour, habits and attitudes and brands have to understand what this means for them.  It can be surprising in some cases just how big the differences can be – we know, for example, that people renewing their mortgages in the next few months have been particularly hard hit by recent interest rate pressures, changing their spending priorities.

“On the other hand, 27% of 21-26-year-olds living at home with parents say they prefer to buy premium goods and services, the same proportion as over 55-year-olds who own their home outright, suggesting that exposure to the housing market can sometimes create unusual alignments.”

Ian Liddicoat, Chief Technology Officer and Head of Data Science at Adludio

“In the face of a gloomy economic outlook and a possible recession, the relative resilience of marketing budgets in Q3 2023 is encouraging to see. Having learned the lesson of the past few years, brands have clearly understood the importance of maintaining marketing activity through a crisis. Nevertheless, with a predicted drop in ad spend, marketers must ensure that their budgets are working as hard as possible.

“It comes as no surprise then that AI technology has been identified in the report as a strategic investment. Indeed, it is especially powerful when applied in the optimization of ad campaigns. Capable of analysing which creative elements are driving outcomes, this is giving marketers both the ability to deliver the best performing ads but also the deep insight as to why one combination of objects, call to action, or text is more effective than another. As we enter this turbulent economic period, brands that commit to developing and applying creative intelligence in this way will have a distinct advantage.”