This week’s IPA Q3 Bellwether Report reveals that marketers across the UK have returned to main media spend once more, with events, direct marketing and PR budgets also being revised upwards while sales promotion, out of home and audio have declined.
While the report draws its own conclusions, Decision Marketing quizzes industry chiefs to gauge the mood of the marketing nation.
First up is Kantar Media’s head of TGI agency partnerships Rachel Macey, who insists that something does not quite add up in the IPA study. She explains: “Our latest Great Britain TGI data shows that audio and out of home are holding up well in terms of audience engagement. Some 83% of all British adults claim to listen to radio and 28% say they listen to podcasts once a week. Meanwhile, 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- to 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.”
Kinetic Worldwide chief client officer Nicole Lonsdale also takes up the out of home theme, insisting that official revenue figures and forecasts paint a different picture of the sector compared to the Bellwether report.
She saya: “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 percentage 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.”
Even so, Fuse chief strategy officer Alex Charkham claims that while there’s plenty of evidence to suggest brands who prepare long-term strategies tend to be more recession proof, this is easier said than done during economic downturn.
He adds that typically, during this time, belts will be tightened and short-termism will take over. Of all marketing strategies, sponsorship tends to be one that takes the hit in recessionary times. However, due to major events such as the Euros and the Olympics taking place next year, brands who effectively lean into these cultural moments will reap the benefits.
Charkham continues: “When it comes to events, the seventh successive upward revision to events marketing budgets instil confidence in the industry (despite growth being the softest since the end of 2022). Given the recent summer of sport, it’s hardly surprising that marketers are continuing to recognise the importance surrounding live events and the huge audiences it can attract. The opportunity for brands and marketers to engage with big sporting moments is evolving, particularly in women’s sport where we have seen investment increase 20% YoY.
However, Charkham insists that the downward revision to market research budgets is far from ideal. “While research can be costly, it can also be imperative to driving crucial change to the way we market and advertise. For example, Fuse recently conducted a study with System1: The Sport Dividend: Unlocking Incremental Brand Growth Through Sport Sponsorship, which revealed that a range of activations associated with sport sponsorship, from advertising to digital content, has the potential to drive stronger growth than traditional, brand-led communications. Industry research like this can have positive implications for creative quality and media spend for brands of all sizes across B2B and B2C.”
For Mindshare UK chief solutions officer Richard Kelly, the 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 of the past.
He adds: “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.”
Even so, Kepler EMEA managing partner James Coulson sees a positive change since Q2 in that brands appear to be more pragmatic, with a significant move away from short-termism in their marketing approach – as witnessed by Q2’s surge in price promotion activity – to a long-term investment perspective.
He continues: “It’s clear to see recession marketing theory being put into practice as brands invest to ride it out. Reinvesting in channels that lost out, for the purpose of longer-term objectives, shows sense from the marketers, and, I imagine, an effort to really squeeze every drop of value out of the impending Christmas spending boom.”
Meanwhile, Joint founder Richard Exon maintains that every marketer on earth is managing their brand in an unbelievably unpredictable news environment, and this looks set to continue in 2024. He reckons that the report points to the “three Cs” being key to marketing success next year – control, consistency and competitiveness.
He explains: “First, as the 24 hour news cycle throws up continuous shocks that impact sharply on consumer confidence and a sense of hope for the future, well planned and funded communications and campaigns are where confident brands can exert some sort of control of the narrative.
“Second, as countries, economies and governments lurch from one crisis to the next, brands that invest and show up consistently in the right channels with the right messages will garner more trust with consumers even as their trust in institutions diminishes.
“Third, ever more savvy consumers know a fair price when they see one, be that for every day essentials or occasional indulgences. Investment in advertising to the message out there is a necessary step for any brand to remain competitive. And done well can protect against aggressive discounting from the competition.”
Analytic Partners senior director Justine O’Neill points out that not only are main media marketing budgets continuing to expand, they are also rising at their strongest pace in over two years.
She adds: “We have seen countless times that advertising creates long-term value for brands. The brands that increased or maintained investment during turbulent times have seen on average 63% stronger ROI, and 60% growth in incremental sales and longer-term brand building.
“Though there are storm clouds gathering over the UK economy, dimming the positive mood, brands can prepare themselves for stormy weather with scenario planning. This can make all the difference in marketing and media planning – literally being prepared for another very hot, or very wet summer, can be the key to success for an ice cream company.
“While uncertainty prevails, scenario planning allows them to not just plan for a recession – or not. When reviewing their budgets and activities for next year, other factors must be taken into account as well, including pricing, TV usage, economic trends, demand and weather. Past events can be used as a blueprint for this, such as the insights on long-term growth after economic downturns, which can help navigate going forward. Experiments and proxies can help fill the blanks of new channels, data or unknown events.”
Finally, Growthcurve founder Mulenga Agley believes that the cost-of-living-crisis is an on-going challenge for brands, consumers and marketers alike.
He adds: “In true British fashion it is ‘Keep Calm and Carry On’ building and supporting your brand – which is what we are seeing as brands look to growth marketing tactics to ride the next wave of turbulence and pull back on spend in areas such as sales promotions.
“Those companies adopting a more strategic, longer-term view for their products and services, while considering a proactive approach towards climate change and sustainability, will likely be the ones to reap the rewards in Q4 and beyond. It’s a tricky balance but will help re-instil consumer confidence and brand loyalty.
“In a challenging market, brands need to not just hunker down but continue to look for growth opportunities – continuing to search for market share from competitors that might be struggling. Those also paying close attention to new trends, including advances in technology and AI, will come out on top. AI is already playing an increasing role in research and marketing campaigns and investment in this area will intensify.
“Businesses also need to venture beyond paid media campaigns and learn to leverage scalable organic distribution mechanics (like automation, peer-to-peer and content) or network effects (if their business is a platform, or marketplace). Reducing over reliance on paid media and investing the time in creating a growth engine which can run around the clock even when ad campaigns are turned off will help ensure your ship keeps sailing through what we all know are going to be some very choppy seas!”
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