Last week’s release of the latest IPA Bellwether report revealed an eight-year high in the rate of growth for marketing spend, with a 14.1% hike for Q1 2022 significantly ahead of the previous quarter’s 6.1%.
The buoyant rise marks the fourth successive quarter that the Bellwether panellists have reported growth on balance to marketing budgets. However, adspend forecasts for 2022 and 2023 were slightly downgraded, as “strengthening headwinds” that could affect recovery remain, including high inflation, global events, supply chain disruptions and labour shortages.
PMW spoke to leading commentators from the industry to get their take on the latest figures and the outlook for the year ahead.
“A genuine feeling of change as we march towards the cookieless future”
Łukasz Abgarowicz, VP of Agencies, RTB House: “2022 is shaping up to be one of the most important years in digital marketing – there’s a genuine feeling of change as we march towards the cookieless future. Google’s announcements regarding Topics API and FLEDGE have provided some colour to a new industry built on privacy, but marketers will rightly be hesitant. This hesitancy, and the significant effects of inflation on living costs, may explain why the report highlights an eight-year high in marketing budgets but a lower forecast in ad spend.
“However, with bigger marketing budgets comes an opportunity to tap into new technologies built to navigate the internet of the near future. The most important of which is contextual targeting built on Deep Learning algorithms. Unlike traditional AI, Deep Learning is entirely autonomous, learning and adapting automatically without human input. This technology turns contextual targeting into a highly effective strategy for delivering your message to the right consumers and can be used effectively within the framework set out by Google.”
Nick Reid, SVP & Managing Director, EMEA, DoubleVerify: “Brands are building momentum from this growth through investment across platforms and environments, whilst utilising technology that can optimise from a media quality baseline. We are also seeing the transition away from reliance on the third-party cookie for digital advertising.
“For this reason, we can expect an even greater focus on areas such as context and attention from targeting, measurement and optimisation perspectives. As advertisers look to engage and deliver more meaningful experiences to their consumers, insights into metrics like exposure and engagement provide powerful new sets of data that can help predict an outcome - whether a brand is looking to drive awareness or conversion. Armed with this insight, campaigns can be refined, high-performing environments can be identified, and approaches optimised to secure consumer attention at scale, without the need for tracking.”
Harriet Cunningham, UK Sales Director, Scibids: “For marketers that have taken heed of the dramatic changes seen in digital marketing, preparations via new platforms and technologies will have already taken place. The most revolutionary of these new technologies has been AI, taking levels of data analysis to unprecedented levels. In fact, as an increasing number of marketers use AI-driven solutions to harness new forms of contextual signals for targeting, conversion rates, attention and overall efficiency will increase.
“Brands and marketers should already be leaving clicks and visits as a measure of success behind, tapping into AI as a means to customise campaigns and analyse relevant data at a granular level to deliver advanced optimization. I expect in the long term we’ll see a resurgence in all digital marketing applications, driven by cutting-edge machine learning that maximises return on ad spend.”
Nial Ferguson, Managing Director UK & Ireland, Sourcepoint: “These threats to consumer confidence mean that advertisers might be tempted to double down on personalisation tactics to ensure their marketing is impactful and efficient. While consumers are more likely to engage with tailored pathways, they’re also going to be suspicious and frustrated by predatory tracking or inefficient user experiences. Therefore, in Q2, advertisers need to be careful when assessing the balance between personalisation and privacy to make the most of the new investment.
“Advertisers should go beyond a tick-box approach to regulatory compliance, and integrate an ethical approach to data collection into their core functions. The privacy-first future will benefit the publisher, advertiser, and the consumers as these trusted and transparent partnerships create a privacy-centric ecosystem to provide a mutually beneficial environment.”
Alison Harding, VP of Data Solutions, EMEA, Lotame: “The increase in online spend shows that marketers and publishers are now in a better position for the retirement of third-party cookies. This is due to the introduction of more identity testing and maybe even having the adoption of identity solutions as part of the marketing mix. There is also an argument to be made that businesses may be pivoting spend into online advertising as they are being boxed out of the Apple mobile universe, and are moving budgets to fill this gap. It will be worth brands and advertisers keeping a close eye on how the ongoing situation in Ukraine may begin to affect their budgets, and their planning, from Q2 onwards.”
“70% of creative is underutilised, meaning millions in wasted advertising spend”
Anastasia Leng, CEO and Founder of CreativeX, said: “The rise of new platforms, channels and the proliferation of content means marketers must make quick yet effective decisions about hundreds of thousands of pieces of content. But what’s most worrying, is that brands aren’t ready for this, because they are not optimising their creative content. Bigger budgets and brand ambition only amplify this challenge.
“We know that creative excellence translates into sales uplift. On average, just 28% of a brand’s creative meets their own quality criteria when we start working with a partner. That means a massive 70% of creative is underutilised – for some, this can mean millions in wasted advertising spend. Marketers can’t afford to take these risks, especially in an ever competitive and uncertain geopolitical environment. Marketers must wake up and recognise their creative for what it is: a major untapped competitive advantage to drive media efficiencies.”
“Mobile advertising will become an even more saturated market”
Paul Coggins, CEO and Co-Founder, Adludio: “As budgets expand, mobile advertising will become an even more saturated market, meaning brands will need to deliver ad campaigns that guarantee engagement against serious competition. Despite this, true engagement is often overlooked, with technology and tools instead focusing on the lower parts of the marketing funnel.
“Thankfully, marketers can now seek the assistance of innovative, proprietary technologies, like those which use AI-based algorithms. These leverage interactivity and historical creative data to target audiences with engaging ads. This will shift targeting away from third-party data and social demographics toward an approach that is built on first-party data. This is more appropriate for the cookieless world and data-safe media buying. To remain competitive in this crowded market, budgets should be channelled into technologies such as these.”
Paul Smith, VP Sales, Adtonos: “Of course it’s a shame to see audio budgets fall in Q1 2022, but it is understandable considering the circumstances. Despite the fact the audio industry is booming, it makes sense that marketers are turning to what they know rather than risking something new – however exciting it might be. This reflects the reality that we are a society slowly re-emerging from the pandemic, only just exiting an extended period of economic uncertainty, and to top it off, find ourselves in the midst of geopolitical turmoil.
“The decrease in home audio consumption correlates with a population that's back on the move which implies that access to audio through connected devices remains high. Combined with a greater thirst for personalised content, this represents a shift in the way audio is being consumed and advertisers should pay attention.”
Paul Wright, Managing Director (UK / FR / MENA / TR), AppsFlyer: ‘’As the advertising industry continues to witness ongoing signs of recovery, the journey towards digital transformation should be a key consideration for businesses who are excited by the prospects of the budget expansion across different channels including events, online and video. Whilst many companies are currently undergoing this transformation to harness multi-channel opportunities, to be successful, it will require marketing and product teams to work closely together to get rich behavioural data to attract new customers, measure accurately the impact of their ad spend on KPIs such as mobile user retention and provide meaningful personalised experience in a privacy-compliant way.‘’
Dom Woolfe, CEO UK, Azerion: “The brands that thrive in this uncertain period will be those that adapt to the current consumer behaviour with creativity. The e-gaming sector, for example, is one of incredible potential as brands are now able to integrate and activate in-game ads into the creative of the game and serve them to a highly attentive audience.
“Brands must prioritise creativity and campaign effectiveness to succeed in driving brand performance and making the most of this boom in adspend.”
“A solid data management strategy has never been so important”
Andrew Stephenson, Director of EMEA Marketing, Treasure Data: “The need for a solid data management strategy has never been so important. Particularly because our own research highlights that CMOs lack confidence around data, and this is fuelling decision paralysis at a time when businesses need to be bold to succeed. Marketers are competing for brand loyalty and engagement against a backdrop of uncertainty and volatility.
“Actionable data allows marketers to be more agile and make more confident decisions, which in turn allows for a clear justification back to the boardroom on the value of marketing as a business critical function. Marketers have a clear opportunity to drive business growth, but data must sit at the heart of this.”
Tony Ayaz, CEO, Scuba Analytics: “The continued growth of online ad spend means an increasingly complex web of data for marketers to grapple with. In order to ensure return on that spend, marketers need a 360 view of the customer. This means it’s vital that marketers step away from the stale data and delayed reports created by legacy analytic systems, and toward real-time analytics. By capturing, analysing, and leveraging insights in real-time they can manage their campaigns and rapidly respond to customers’ needs.”
Ronny Golan, CEO and Co-Founder, ViewersLogic: “The right kind of data will be key to making more confident media investment decisions. Firstly a timely understanding of shifting consumer behaviour and changes in purchasing. Secondly, insight on the impact a campaign has on influencing consumer behaviour and the ability to rapidly conduct A/B testing to avoid backing the wrong horse. Finally, being able to understand competitive responses to this market and to better assess what works and doesn’t work before committing spend. Only through accurate, reliable and compliant data will marketers gain access to these insights and deliver ROAS.”
“Ongoing talent leak”
Bridget Arik, COO, Redmill Solutions: “While the report rightly highlights the socio-economic factors impacting brands from the war in Ukraine and COVID-19, the role of Brexit has been largely underplayed amongst analysis of the supply chain issues facing businesses. Despite reported optimism, greater transparency and understanding is needed about the full breadth of pressures currently placed on brands and their advertising spend. Likewise, the pressures media agencies are facing in terms of servicing their brand client – there is an ongoing talent leak and agencies are having to pay more to retain staff, which will impact profitability. With these pressures in mind, the importance of better data visibility around brands’ media spend is more important than ever to maximise ROI and to give advertisers the agility to navigate these latest challenges.”
Ben Davis, Editor, Econsultancy: “We know that data skills is the area where marketers admit they face the biggest shortfall in their teams – training everybody in the marketing organisation so they are data literate is the first step to creating a data culture or attracting the leadership needed to do so.”
“Marketers shouldn’t chase sales promotion at the expense of brand building”
Justine O’Neill, Senior Director, Analytic Partners: “Sales promotion budgets are receiving their strongest boost for 18 years, and the desire to make up for lost spend and to attract customers back in the short-term is understandable. However, marketers shouldn’t chase sales promotion at the expense of brand building. They need a balanced approach to grow their brand sustainably and not lose base sales.
“Overall, it’s definitely another good sign for the industry and marketers should enjoy this period of optimism! But remember to apply the everlasting marketing principles and create a media mix to maximise marketing spend while targeting long-term success. An agile strategy, with data analytics as the secret sauce, will allow brands to continue their investment and simultaneously adapt to more shifts in the market ahead.”
Matt Andrew, UK Managing Director, Ekimetrics: “In the face of rising inflation, supply chain disruption and skills shortages, brands need to invest in their future to ensure their approach to marketing effectiveness is holistic, forward-looking and, most importantly, fleet of foot. So, as marketers gear up to spend more than in the previous eight years, we’re seeing a growing trend among big brands for bringing marketing tools like mix optimisation in-house. It’s no easy task and often requires specialist help, but when combined with the right approach to data, this gives brands more ownership and control over their solutions, and provides more transparency and agility in uncertain times.”
“More rocky times ahead”
Sarah Baumann, Managing Director, VaynerMedia London: “Consumer confidence is likely to be short-lived as we see the real impacts of inflation and the National Insurance rise hit the cost of living in a very profound way for most people. These, plus the supply chain disruption from COVID and Brexit – and of course the consequences of Russia’s invasion of Ukraine – are going to throw many curve balls at brands and consumers and I suspect we’re in for more rocky times ahead. Revising down 2022-23 adspend forecasts seems prudent at this time.”
Verity Brown, Managing Director, The Specialist Works: “We think Q4 is going to be very challenging, the energy price cap is reviewed in October, which will, at least, double energy prices in a year, adding significant pressure and stress to many consumers, affecting discretionary spending. Add to this a World Cup immediately prior to Christmas that will distort many media markets. Uncertainty coupled with increased demand in an already ‘hot’ market will be challenging. There’s evidence of returning confidence among our clients, with the caveat that consumers are under pressure. Our clients are planning for growth, but they need reassurance, flexibility and evidence to release budgets.”
Phil Duffield, VP UK, The Trade Desk: “Marketers can’t afford to take their foot off the gas and leave the agility and precision born from the pandemic behind – proving ROI is just as important as it ever has been. This is why programmatic continues to attract a growing share of advertiser’s budget – it allows transparency and crystal clear measurement, so that every penny of spend can be optimised to the fullest, no matter the external circumstances.”
James Coulson, Managing Partner, Analytics and Consultancy, Kepler EMEA: “It’s fantastic to see marketer and advertiser confidence continue to grow as we hopefully emerge from the most disruptive phase of COVID. Nevertheless there are serious headwinds to address.
“Firstly, ongoing global geopolitical uncertainty, as well as more domestic squeezing on disposable income will be a major hit to consumer confidence. Secondly the digital marketing landscape is going through the biggest change we've ever seen, upending many of the fundamental processes around targeting, leveraging data and quantifying success. In saying this we’re seeing huge opportunity too. The rise of retail media, advertisers continuing to in-house skills and capability, the constant new technological opportunities all mean tomorrow is going to be very different to yesterday. It’s going to be a challenging and unpredictable few years ahead.”
Richard Exon, Founder, Joint: “The report captures perfectly the curious mix of optimism and caution that all businesses are living with now that we have two years of COVID behind us, yet with a war in Eastern Europe and inflation spiking sharply.
“As trust in our government and its lawbreaking leaders continues to erode, businesses and brands have a vital role in keeping the UK show on the road. The squeeze on real incomes will create more price sensitivity in most categories, creating a sharp sense of competition between brands. Those brands that continue to invest in compelling marketing, product and service innovation and great customer experiences will win disproportionate advantage.”
“Marketers will need to work harder to stand out from the crowd”
Harriet Durnford-Smith, Chief Marketing Officer, Adverity: “With adspend forecasts lowered, and consumers feeling the bite of the cost of living crisis, marketers are going to have to work much harder and much smarter to stand out from the crowd. Having the ability to build more meaningful relationships with consumers by understanding their needs and predicting future behaviour should be the top priority of every marketer. Personalisation will be fundamental to achieving this, but without fingertip access to data, marketers will lack the agility to deliver highly relevant messages in a timely fashion. In times such as these where every decision counts, having better access to data is going to be critical to better decision making.”
Mari Kim Novak, Chief Marketing Officer, Yieldmo: “As growth towards video continues, marketers need partners who can help them create differentiated, high-quality video ad experiences that consumers want to pay attention to, and find those audiences that will be essential to the success of their campaigns. With changing market conditions, inflation, consumer spending and supply chain pressures, marketers need to be agile and recognise that we’re never going back to ‘the way things used to be’. Consumers expect brands to provide integrated seamless advertising experiences and therefore the marketers that are able to provide these will win the lion’s share of sales. This can only be achieved by utilising intelligent predictive data and unique, shoppable ad formats.”
Charlie Johnson, Vice President, International, Digital Element: “While it’s extremely positive to see marketing budgets are increasing, especially after the last two years, it’s worth remembering that the marketing landscape can quickly shift. Despite the immediate concerns in the headlines, online privacy continues to be a hot topic and we know online targeting will continue to get harder in 2022. There’s a need for more innovative tools, such as those helping to adapt post-cookie targeting strategies through location intelligence. These will support advertisers as they attempt to navigate an environment that's always evolving and stay ahead in a privacy-conscious way.”
Pierce Cook-Anderson, Managing Director, Northern Europe, Smart AdServer: “As budgets continue to grow, the industry needs to channel them into tools that continue to drive value path optimisation, rather than convolute the supply chain further. Curated marketplaces, for example, deliver better efficiency and more streamlined workflows by packaging up ready-made audiences with high-quality inventory. This saves time and resources, meaning ad budgets can be better allocated – even more important considering current challenges around inflation. At the same time, curation gives publishers back control over their data and increases demand for their inventory.”
Jacopo Gerini, Chief Commercial Officer, Clickio: “Moving forward, publishers should channel their efforts into optimising their sites for the user experience, focusing on features that increase loading speeds, boost engagement, and drive advertising revenue. Working with Consent Management Platforms will also be key – helping publishers stay abreast of industry initiatives while optimising site design to boost consent rates.”
Isabella Jenkins, Agency Partner at Permutive: “If ad spend is to reduce, brands will need their advertising to work harder as a result, making more out of less spend. One way brands can achieve this is by leading with a strong first-party data strategy, reaching the right audiences in the most effective way possible.
“This strategy will necessitate partnering with publishers, providing brands with access to consented first-party data that publishers hold. User privacy can also be kept at the heart of this strategy, as no individuals are identified, meaning that brands can ensure they are being privacy-compliant in an age where user data is an invaluable commodity. With this approach, advertisers can maximise their campaigns regardless of the ad spend forecasts, rebuilding trust in advertising once again.”
Niall Moody, Managing Director at Nano Interactive: “To succeed in the months ahead advertisers need to reevaluate their targeting approaches and embrace new innovative solutions that don’t rely on the identity-based practices of old. In addition, out of necessity, we are seeing a growing appetite to find newer, more appropriate metrics to measure the effectiveness of advertising with the growing discussion around the attention economy being one example. Further, we are seeing that changes in consumer behaviour means that the linear path to purchase no longer exists with needs, moods and mindsets evolving by the second. In turn this means brands must now show up at the most relevant time to the most relevant audience and create cut through like never before.
"Advertisers should therefore ensure they are working with technology providers that use Deep Learning models to analyse live intent signals with advanced contextual understanding to better deliver their messaging. This approach puts people’s privacy interests and brand safety at the core, whilst delivering relevant and timely ads to receptive audiences."
“Sustainable advertising is key when consumers are demanding climate action”
Justin Taylor, UK MD, Teads: “With the eyes of the industry now focused on delivering sustainability, advertisers need to ensure that they are working as hard as possible to reach this goal. One way in which they can achieve this is by spotlighting attention. By creating a framework for measuring attention, advertisers can deliver more engaging, shorter ads that in turn reduce their carbon footprint. Sustainable media may only be a relatively small part of the ‘climate action’ equation, but with ad spend forecasts lowered for the next two years, advertisers need to be smart with their creative. Delivering sustainable advertising is key at a time when consumers are demanding climate action from the brands they consume. As the ad industry continues to rebuild, it is all of our responsibility to ensure we are creating a responsible and sustainable media ecosystem.”
Ryan Afshar, Head of Addressability UK, LiveRamp: “To ensure that their ad spend budget is being directed efficiently, brands should continue to build campaigns based on people-based identifiers. Simultaneously, publishers who can increase their authenticated user base using strategies such as content walls, newsletters and email subscriptions, will build trust and loyalty with their audiences as privacy and personalisation are balanced.
“Publishers and brands who can work together on strategies that have addressability at their heart will thrive as we enter a privacy-centred, addressable future.”
“Key to strike a careful balance between digital and offline experiences”
Claire Burgess, Director of Delivery, Incubeta: “Digital has had large growth over the pandemic and will continue to spearhead shopping, but businesses should not forget about the value of offline experiences. Instead they should ensure to strike a careful balance between the two, to ensure they are using a mixture of all marketing channels to support the user throughout their whole customer journey. New technologies will assist here, and these increased budgets should be directed towards innovation, such as the use of augmented reality to help visualise products.”
Natasha Banjo, Director of Operations at News Live: “The next year will be a huge time for growth within our industry. The pandemic taught marketers many lessons around catering for all, for example, creating hybrid events to suit different audiences. With reduced restrictions on large scale events, I believe we will see investment move towards face-to-face opportunities and projects as businesses seek to re-engage audiences.
“To succeed, marketers looking to move or return spend into events need to ensure the event concept is aligned with their brand messaging and audience interest. Flexibility will remain key, as we never know what’s around the corner. And the key lesson here is that events need to be adaptable, as well as be able to deliver authentic and creative experiences.”
Enyi Nwosu, Chief Strategy Officer, UM: “The last two years have also brought about a sea change in support for causes like equality and the environment, with clients and talent leading the charge and pushing for change.
“Expect to see even more investment directed intentionally towards publishers and platforms with progressive values, who are making a positive difference in the world. They will be well placed to weather the storms as costs rise and supply chains tighten.”
Richard Kelly, Chief Revenue Officer, Mindshare UK: “It's important to remember that advertising funds quality content, sites and journalism. In periods of uncertainty both at home and internationally these things become more important than ever, and we're keen to see momentum to support areas that champion enduring, sustainable and responsible growth”
Ali MacCallum, CEO, Kinetic UK: “There are watch outs related to the rising cost of living and broader geo-political factors but industry forecasts and demand indicators are very positive. Advertisers are leaning into the data driven and creative scale OOH offers at a time of inflation in TV advertising for key audiences, impending HFSS restrictions and the death of the cookie. We’re feeling very optimistic about the rest of the year based on the briefs we are receiving.”
Mark Geden, Head of Strategic Planning, Tribal Worldwide: “Businesses need to be on high alert and prepared for the impact of the rising cost of living and reduced disposable income, and look for alternative opportunities for growth. Digital transformation will be key, with businesses needing to put more of a focus on customer needs and interests, such as within the ESG space, electric vehicles and energy efficient efforts for example, as well as building within the e-commerce space for more of an immersive customer experience.”