Reaction across the industry to the latest IPA Bellwether report.
Julie Lock, Marketing Director UK&I at HubSpot:
“The IPA figures paint a mixed bag and mask some worrying dynamics. Budgets are tough and brands are reacting to economic pressures, so it’s no surprise that sales promotions are high at the same time when other marketing budgets such as main media have dropped.
“But in this unpredictable economic climate, marketers should identify where their brand can drive their biggest impact, looking for punchier ways that require less budget. Once those areas are identified, it’s about utilising the new technology that marketers have at their disposal, particularly with AI that can be used as a catalyst for creativity to help ensure steady growth. In fact, three quarters of sales, marketing and CX managers have used AI in the last year and more than 85% endorsed its effectiveness. Using AI tools for content personalisation, data analytics and content generation means doing more with less. This revolutionary tech will allow marketers more time to do what they do best.”
Nicole Kivel, Managing Director Northern Europe at Criteo:
“Inflation rates falling further than expected in June certainly teases a brighter second half of the year. It also reflects well on the marketing positivity represented by some of the latest growth numbers. Driving sales and averting the temptation to batten down the hatches is vital because the opportunities are there. Our data showed hourly sales recently leapt 89% for UK advertisers launching their own ‘Prime Day’ inspired promotions.
At the same time, as the IPA suggests, focusing too much on short-term goals like sales or ROAS leads to the deterioration of your upper funnel – it’s a challenge we often see in retail media. If brighter days are indeed what we can expect later in 2023, then brands need to position themselves to make the most of it. This starts with a full funnel approach that, I hope, will be represented by increases across other categories in next quarter’s results.”
Elliott Millard, Chief Strategy and Planning Officer, Wavemaker UK:
“Another IPA Bellwether report, another story of a divided marketplace and another headline of increasing reactivity in the marketing community. Yet again, sales promotion budget increases is the lead story of the release with a spike greater than any in the last two decades. In a time of crisis, it is clear that marketers are playing it safe and pulling short term levers to maintain sales volumes and to satisfy shareholders.
However, as is so often the case, there is a tension between marketing belief and consumer behaviour. Around 50% of the country (and this number rises to nearly 60% amongst key, desirable youth audiences) say that they are sticking to well known brands despite the cost of living crisis. And for many categories the number of people who place sales promotion as a key purchase influencer is actually in decline when comparing current behaviours to pre-Covid. Food, drinks, alcohol and toiletries all show declines in the importance of price promotion despite the rush from brand marketers to invest in this space.
This is also where the division and nuance comes through. With 20% of marketers increasing budgets and 15% cutting, there is clearly a complexity to the current situation – not all brands are the same and not all brands should simply follow old ‘invest in brand rules’. Brands operating in categories like AV, home furnishings, appliance and clothing should probably be following the trend for sales promo – all those categories are seeing increases in the importance of that touchpoint. The division here is particularly interesting. Buyers of non negotiable items (food, booze, toiletries etc) look to be more resilient and less price sensitive whereas buyers of more ‘delayable’ items (clothing, home items) are seeking price promotion. Understanding that nuance, as well as your own brand situation is critical – simply following the trend could erode profitability unnecessarily.”
Camille Flores-Kilfoyle, Head of Marketing, EMEA at Reputation
“The increase in sales promotions budgets this past quarter is a positive reaction by marketeers to help combat the current cost-of-living crisis. As consumers are feeling the pinch, businesses are hyper focused on ways to attract and retain their customers and keep them engaged, even when things are tight. At Reputation we are constantly talking to our clients about how brand loyalty and the willingness to do what it takes to support consumers goes hand in hand. Businesses need to be aware of the importance of marketing in a difficult economic climate and adjust their strategies to focus on meeting customers where they are.
Brand reputation and customer loyalty are important factors to consider when making marketing decisions. Businesses that focus on building these are more likely to be successful and promotions are a great tool for this. However, it more important than ever for marketeers not to overspend and to ensure any promotions are targeted to the right audiences for the maximum ROI. This in turn leads to a positive brand reputation and enhanced retention.”
Patrick Reid, Group CEO, Imagination:
It’s exciting to see the latest Bellwether findings reflect what we’re observing across our own client portfolio, with expanding budgets for events and meaningful brand experiences. Having recorded its highest growth in a year with a net 9.3% growth in allocated spend, experiences are looking on track to meet and potentially exceed annual growth projections of 14.5% in 23/24.
Marketers’ continued investment in experiences demonstrates a deepening recognition of the power of in-person and hybrid experiences to connect with customers. Something that will become increasingly important as the uncertain economic climate and cost of living crisis continue and brands are focussed on value and ROI.
