The IPA Bellwether Report, covered in PMW yesterday, indicated that UK ad budgets are now growing at the strongest rate since 2017. This was driven by pent-up consumer demand, a successful vaccination roll-out and looser restrictions.
Even more encouragingly, company-level financial prospects are at their most optimistic since 2015, and adspend is set to grow further in 2022.
But clouds are appearing on the horizon. Some surveyed companies were wary of lingering uncertainties, particularly around the trajectory of virus cases as we head into the winter period. Ongoing supply chain disruptions, which some firms mentioned had impacted their ability to carry out marketing campaigns, were also cited as a downside risk.
Lockdown savings versus skills gaps: Marketers identify pros and cons of post pandemic UK
IPA Bellwether panellists were asked to comment on the main opportunities and threats for their industries over the coming 12 months.
A selection of responses are summarised below:
"More normal consumer spending habits." Financial Services
"Brexit can be pushing companies to look for further, unexplored opportunities in the UK." Media/Marketing
"Climate change - more people trading gas products for electric ones." Consumer Durables
"Economic recovery will provide a more stable operating environment." Automotive
"Continued shift towards green infrastructure development." Industrial/ Utilities
"Effectiveness and pace of the vaccine roll-out." Media/Marketing
"Consumers spending their savings post-pandemic." Retail
"Re-opening of hospitality will restore food service business." FMCG
"Sustainability, digital marketing and online sales growth." Consumer Durables
"New house building planned in the government's 'levelling up' agenda." Industrial/Utilities
"A shift towards digital and e-commerce trading." Media/Marketing
"Return of furloughed workers." Automotive
"Sales growth back to pre-pandemic levels." FMCG
"Sales promotions and events as containment rules relax and businesses re-open." Consumer Durables
"Huge growth in digital transformation needs." IT/Computing
"People putting off investment into IT projects given the increasing uncertainty in the economic environment." IT/Computing
"Reduced availability of candidates for operational roles leading to inability to expand." Automotive
"Material shortages and rising prices of raw materials." Consumer Durables
"COVID-19 outbreaks could reduce business." Financial Services
"Brexit continues to place adverse pressure on business with the EU." Industrial/Utilities
"Another major downturn due to COVID-19 or weaker China growth would put global growth under pressure." Media/Marketing
"Freight shortages leading to difficulty in getting the product to the stores in time." Retail
"Brexit continues to add complexity and adds friction to trade with EU." FMCG
"Inflation, component supply, transport issues, labour shortages." Industrial/Utilities
"Economic uncertainty. Slow down in the housing market." Consumer Durables
"Larger brands focusing on cost-cutting. Brands are still cautious to spend due to uncertainty around future lockdowns." Media/Marketing
"Continuation of global pandemic and variants resistant to vaccines, leading to further restrictions in travel." Travel/Entertainment
"Budget cuts, greater competition, new digital competitors." Public/ Charities
Following the report, Performance Marketing World reached out to key industry leaders for their key takeaways from the report.
“The end of the year looks very different to what we had imagined three months ago”
Matt White, VP EMEA Quantcast: "Despite this growth providing much-needed rejuvenation to the industry, it failed to reach the +17.4% initially forecasted for the 2021/22 financial year. The risk of collapsing consumer confidence, triggered by inflation and rising interest rates, and the potential reintroduction of Covid restrictions could mean that the end of the year looks very different to what we had imagined three months ago. The hope is that the advertising industry can play its part in maintaining consumer confidence and spending. If restrictions do kick in, digital advertising will once again take centre stage.”
“Agility and precision have never been more important”
Phil Duffield, VP UK at The Trade Desk: “It’s really encouraging that marketing budgets are continuing to rise again, with video and online leading the way, highlighting the critical role our industry can play in powering the economic recovery. Agility and precision have never been more important. When budgets were pinched and ROI was everything, marketers had to learn to make every decision count. Now spend is unlocking, we can’t expect to go back to rigidly planning ad spend months in advance. After all, we’ve witnessed first-hand how circumstances can change at the drop of a hat - and it’s those learnings that are here to stay.
“Consumers have resumed a sense of normalcy and in the run up to Christmas and they’ve got cash to spend - but marketers will need more than a healthy budget to win their attention. Ultimately, the brands who come out on top are the ones who embrace a data-driven approach to make smarter, more deliberate decisions on spend across all channels.”
“Brands will grow via technology expertise, first-party data curation and smart platform deals”
James Coulson, Managing Partner, Analytics and Consultancy, Kepler EMEA: “The Bellwether data shows brands are accelerating investment and the overall outlook into 2022 looks strong. But it's clear that marketers need to adapt to an uncertain future. A lack of predictability around the economic future, consumer behaviour, supply chains and the legislative backdrop to digital marketing, is causing marketers to hedge their budgets by investing in channels that allow for agility, data usage and high measurability. We saw the same happen after the 2008 financial crash, there was a step change in digital investment, which only continued to grow over the next decade. We expect to see more considered investment in digital media going forward, framed by brands growing technology expertise, first-party data curation and smart platform deals.
“It’s crucial advertisers take this moment to ensure they put themselves in the best position to measure video’s attention”
Nick Reid, Regional VP of Northern Europe, DoubleVerify: “It’s clear UK recovery across the industry has shifted up a gear with this quarter's Bellwether Report revealing marketing budget growth is at its strongest in over four years. With video being the main driver in main media, up +12.6% from +4.2%, its crucial advertisers take this moment to ensure they put themselves in the best position to measure video’s attention by gaining timely, impression-level insights to optimise their campaign performance - from looking at the impact of an ad’s presentation to key dimensions of consumer engagement. With our recent Global Insights Report revealing just 15% of video ads are both audible and in-view on completion, advertisers are just scratching the surface.
“Only by using methods that quantify attention metrics like viewable time, share of screen, video presentation, audibility, and more, can brands pinpoint how much impact their ads are having. Armed with this insight campaigns can be refined, high-performing environments can be identified, and approaches optimised to secure consumer attention at scale.”
“Digital investments are more competitive than ever”
Dan Chorlton, Co-founder and CEO, GOA Marketing: “The outlook is positive but there are still lots of worries of inflation, supply chain issues, new covid strains and more that might hit consumer confidence. And we've still not seen the true financial impact of COVID. Digital budgets can be tactically deployed and cut back if needed so are at an advantage however the evidence to support long term brand building via a host of channels is strong and supports risks from businesses. Businesses should keep an eye on ROI from digital investments because they are more competitive than ever and businesses need to bring best in class approach to digital alongside quality monetisation of their customers maximising LTV to succeed in today's environment.”
“Strategic thinking and creative experimentation”
Richard Kelly, Chief Revenue Officer of Mindshare UK: “It’s encouraging to see sustained growth in marketing spend, with main media continuing to perform strongly. As the economic outlook continues to brighten far faster than anticipated, we’re focussed on driving growth for our clients, while helping them navigate the challenges identified in the report such as supply chain issues. Key here is a combination of strategic thinking and creative experimentation to leverage emerging tech across channels such as TV, out of home, social, influencer, and video news and entertainment.
“Build out personal and tailored experiences fit for the new era of change”
Andrew Stephenson, Director of Marketing, EMEA, Treasure Data: “Strong growth in budgets, particularly in video and online, will see many marketers sigh in relief, as confidence regains momentum. But without effective customer data strategies in place, brands risk going into the Christmas period blind, regardless of their increasing budgets. For many brands, this is uncharted territory; having seen their customer data sets increase tenfold during the pandemic, as shoppers shifted online. Now they require robust marketing strategies that will unlock seamless online and offline experiences for customers, as they return to stores.
“The likes of Ikea, which is in talks to purchase Topshop’s former flagship in Central London, and HMV returning to the high street with live music in stores, highlights the emerging power of experiential. Brands that have the competitive edge this Christmas will put customer data at its core, and build out personal and tailored experiences fit for the new era of change.”
“Videos’s fortitude and stability in the current landscape”
Stefanie Briec, Director, Demand Sales UK and International, FreeWheel: “The increase in marketing budgets is hugely encouraging, with renewed investment in the premium channels that have seen an acceleration in consumption in the last year. Video was, unsurprisingly, the top-performing segment of the main media category during Q3, proving the medium’s fortitude and stability in the current landscape.
“Premium platforms such as connected TV are emerging as the preferred way of watching video, thanks to the easy access to content and enhanced viewing experience. With video’s current popularity supported by growing marketing budgets, marketers can anticipate positive returns on investment through the many channels and platforms of the premium video ecosystem.”
“Vital brands continue to engage with reliable, real-time data”
Patrick Johnson, Global CEO, Hybrid Theory: “The results of the Q3 report should leave no doubt that the marketing space hasn’t just ‘survived’ the challenges of the past 18 months, but continues to thrive. With budgets increasing at the strongest rate since 2017, brands and agencies can plan and execute strategies with confidence. Digital advertising in particular saw strong growth, with 10.6% of firms upwardly revising their budgets in Q3. Key to this is the significant structural shift we’ve seen in how we live and work, as well as smart brands increasingly tapping into newer opportunities within digital.
“For example, contextual solutions are increasingly advanced, and can provide reliable returns in the crumbling cookie-based ecosystem. Meanwhile, channels such as social allow advertisers to connect with audiences where they are already engaged. Businesses that have associated digital media execution with adapted client strategies have been seeing far higher growth. That said, there are uncertainties ahead, so it’s vital brands continue to engage with reliable, real-time data to understand how they can be agile; understanding who their audiences are and how to reach them effectively in a cookieless future. By observing these trends, advertisers can react with the methods and channels best suited to reaching and resonating with their audiences, no matter what changes lie ahead.”
“No point investing money in campaigns and getting smarter about who you talk to, if everyone receives the same message”
Lisa Haskins, Director of Marketing and Operations EMEA & APAC, VidMob: “To see video claim its spot as the top-performing segment of main media is incredible. As UK marketing budgets grow, there’s no point investing money in campaigns and getting smarter about who you talk to, if everyone receives the same message. Creative is the most important factor in campaign performance, driving two thirds of campaign results, and the next step is to ensure that these results are being analysed; this metric will continue to evolve and be key for savvy marketers looking to optimise ad design and keep driving ROI gains.
“Advanced technology and AI-enabled creative measurement capabilities will help brands understand which creative elements and emotions are driving the best performance, to react quickly and make sure they hit the right tone with relevant targeting, while respecting privacy preferences.”
“Learn from the lessons of the past 18 months”
Filippo Gramigna, CEO, Audiencerate: “For marketing budget growth to be at its highest since 2017 is a great win, and concrete proof that ours is an industry that will continue to innovate in response to challenges thrown our way. We are riding a perfect wave of heightened consumer demand, fantastic vaccine rollout and the end of pandemic-related restrictions, and marketers have had the best possible reaction to harness it.
“Looking ahead though, what works now may not work this time next year, as the digital landscape and global situations continue to evolve. Learn from the lessons of the past 18 months, and take stock of what is happening in the industry; for digital companies that have accrued customers and data during the pandemic months, now is the time to be thinking about how to best activate this and continue on a growth trajectory.”
“Video ads drove lower brand risk"
Nick Morley, Managing Director, EMEA, Integral Ad Science (IAS): “It’s encouraging to see that the growth of marketing budgets across the industry are the strongest they’ve been in years, with confidence clearly leaning towards video ad inventory. The latest IPA Bellwether report solidifies video’s position as the top performing media format in Q3 2021, following a positive H1 2021 in which video ads drove lower brand risk – with the UK even leading global brand risk reduction across video environments – and greater viewability than display ads.
“However, despite these positive steps forward, brands mustn’t be complacent when it comes to optimising and safeguarding their digital media quality. To effectively spend increasing digital advertising budgets, brands must utilise the latest technologies to control the context and suitability of ads and where they appear. These capabilities will be crucial to maximise investment by interacting with engaged consumers via safe, suitable and relevant video ads.”
“Monitor regional stock levels to protect campaign success and customer experience this Christmas”
Charlie Johnson, VP International, Digital Element: While seeing marketing budgets increase at their highest rate in four years is incredibly encouraging, the report also reveals how behaviours driven by the Covid-19 pandemic persist. Digital ad spend continues to grow faster than any other medium, overshadowing offline placements despite relaxing regulations allowing consumers to travel freely.
“As we enter the seasonal shopping period, we’ll see if marketers’ expectations that online will be the most effective approach to engaging consumers becomes reality. We’ll all be keeping a keen eye on these shopping patterns, which now face the additional risk of disruption caused by global supply chain issues. The next few months will be revealing as we watch the continuing disruption of recent years play out. For marketers, access to reliable data will be vital to understanding how this turbulence is impacting shopping behaviours, both online and offline; meanwhile monitoring regional stock levels to protect campaign success and customer experience this Christmas will be similarly important.”
“Accumulated lockdown savings”
Dave Randall, Commercial Director at Future plc : “According to our recent study of 2,000 UK consumers in September 2021, consumers have nearly £200bn in accumulated lockdown savings, and 78% of them are planning to splash the cash on Black Friday purchases and Christmas gifts. This represents a huge opportunity for brands and agencies, so it’s great to hear that marketing budget growth is at its strongest in over four years.
“To fight for a slice of the predicted consumer spending pie, marketers must prioritise their peak trading marketing strategy and focus on grabbing cash-rich consumer attention with relevant and specific content. With vast amounts of first-party data and a deep understanding of their audiences, publishers are the perfect partner to help brands and agencies engage with these high-intent targeted audiences, while offering flexibility and adaptability – vital characteristics as ongoing supply chain uncertainty makes stock levels an increasingly crucial consideration for marketers.”
“Publishers and advertisers shouldn’t neglect compliance during the digital boom”
Sivan Tafla, Co-Founder and CEO of Total Media Solutions: “The report should be positive reading for the industry, with digital advertising up 10.6% in Q3 2021, and a +11% increase between Q1 and Q2 2021. However, this continued investment in digital does not guarantee high returns for advertisers. It is up to publishers to invest in areas like brand safety and compliance with Google policies, such as its recent page experience update Core Web Vitals, to ensure a smooth and secure media buying process. Only through this attention to compliance can publishers and advertisers maintain high returns on the increased investments in digital advertising efforts over the long run.”
‘Moving into a privacy-first era, utilising own media channels and establishing trust will be crucial”
Paul Wright, Managing Director, UK, France, Middle East and Turkey, AppsFlyer: “The rise in direct marketing – which was the strongest upward budget revision for 11 years – aligns with what we've seen specifically in the mobile space where brands are prioritising their owned channels, such as email and social media, to reach consumers and build brand affinity. Moving into a privacy-first era with reduced access to user-level data, utilising these channels and establishing trust will be crucial. In order to maximise direct marketing, brands also need to ensure they can seamlessly transfer valuable prospects from an email, for example, directly to the relevant place in a mobile app or website.
“More broadly, the anticipated rise in ad spend for Q4 offers an upbeat outlook for the industry. Specifically on mobile we've witnessed tremendous growth in marketing activity over the last year. For example, within the eCommerce industry app installs driven by marketing activity surged 133% during the first wave of the pandemic while remarketing has remained 3x higher than pre-pandemic levels, even allowing for a post-iOS 14 drop. To sustain growth, measuring the ROI of marketing activity and leveraging the data available to make informed decisions will be essential.”
“Dedicate some attention to career growth”
Kirsty Giordani, Executive Director, International Advertising Association (IAA), UK: “We’re incredibly pleased with – and proud of – the resilience of the advertising industry here, a lot of which is testament to the tenacity of our workforce during recent turbulent times. We all rely on the talent in the industry to support its ongoing growth, and with many young people starting their careers under difficult circumstances due to the pandemic, now is the time to dedicate some attention to their personal career growth. We need to be providing a supportive and innovative environment for them to succeed, and to safeguard the future of our industry.”
“App-like navigational features will be key factors”
Jacopo Gerini, Chief Commercial Officer, Clickio: "Now is the time for publishers to look towards monetisation solutions to capitalise on the increase in advertising investment we’ve seen throughout Q3. By using technology to manage ad placements dynamically, they can ensure they make the most of their advertising inventory to maximise revenue while reducing their workload. Moving forward it will also be important for publishers to look beyond monetisation, to technologies that can improve site performance and the user experience. For example, with more and more traffic coming from mobile, faster loading speeds, adaptive layouts and app-like navigational features will be key factors in increasing viewability, user engagement and ultimately advertising revenue.”
"Moving away from proxy metrics towards a performance-focused approach”
Neil Holmes, UK Head of Sales, LoopMe: “With the industry enjoying sustained growth as it heads into the final quarter of 2021, it’s important that marketers continue to optimise ad relevance and resonance to boost campaign performance. Moving away from proxy metrics towards a performance-focused approach – where measurement is tied to outcome-based KPIs from the start – will enable marketers to deliver solid results throughout the remainder of the year. In the longer term, it will be vital for marketers to draw on tangible metrics from first-party interactions, purchases, and audience intelligence research to keep abreast of evolving consumer behaviour. In doing this, they can consistently match campaigns to consumer needs and interests.”
“Technological advancements combined with consumer trends paint the full picture of video growth”
John Wittesaele, EMEA CEO, Xaxis: “The fact video is the best performing advertising category (up 12.6% on Q2 2021) in this year’s report makes sense when consumer behaviour trends clearly indicate the channel is on the up. Audiences have spent increasing amounts of time with video, whether that’s through a publisher app on their smartphone or YouTube on a desktop. But, the less-discussed driver of video advertising investment is the technological capabilities, which are equally important to identifying advertising trends and making predictions about future growth areas.
“The growth of video advertising capabilities over the past year have been remarkable; especially as these advancements have had to keep up with consumers’ increasingly fragmented viewing habits. Brands now have greater control than ever to ensure contextual relevance, format suitability, and adaption of the message to the device or environment it is viewed. If video capabilities continue to expand, and integration across formats, channels and platforms keeps pace with consumer habits, we can expect it to be a star performer in Q4 2021 and throughout 2022.”
“More creative and engaging formats, such as video and social, will become increasingly important in grabbing audience attention.”
Lucy Hinton, Head of Client Operations, Flashtalking by Mediaocean: “With a net balance of +12.8% of companies reporting increase in ad spend, the future certainly looks bright for the industry as it aims to get back to pre-pandemic levels. As we enter the key seasonal shopping period, we will get our clearest view yet of these new online habits. With the added incentives of consumers having more savings, wanting to make the most of the end of lockdown restrictions, and planning ahead to avoid threatened shortages, it is a critical time for marketers to really tune in to what their audience is doing and adjust their strategies in response.
“More creative and engaging formats, such as video and social, will become increasingly important in grabbing audience attention. With the explosive success of TikTok in the past year and the continued high engagement levels of Instagram and Facebook, paired with the tools available to produce novel, eye-catching campaigns, these are instrumental platforms to be included in marketing programmes.”