Bellwether reaction: How to be a leader not a lemming

disciplines_this one2Today’s IPA Bellwether Report predicts a rocky road ahead for marketing budgets as the cost-of-living crisis, soaring energy bills, weakening demand and fiscal uncertainty hit both businesses and consumers alike.

However, it is not all doom and gloom with some sectors performing better than others. Decision Marketing gauges industry opinion to try to help brands plot a course through the maelstrom.

Imagination chief executive Patrick Reid recognises that all businesses are being forced to think hard about their marketing strategies and spend for the coming quarters.

However, amid the economic uncertainty, he is quick to point out that the Bellwether findings have demonstrated that brands recognise the value of experiences as a key avenue for growth, with marketers continuing to invest in live experiences – meeting people’s desire to reconnect and rebuild their social lives through meaningful moments.

Reid explains: “This continued interest can arguably be seen as a lasting side-effect of the Covid restrictions lifted late last year. But as we grapple with the consequences of an economy being squeezed, Q4 and beyond will present a new set of challenges that experiential marketers will have to navigate.

“With the FIFA World Cup Qatar on the horizon, the tournament will provide an opportunity for investors and marketers to tap into the benefits of live events, and continue to use these in their 2023 plans.”

For Econsultancy managing director Richard Robinson, the latest Bellwether may just be remembered as the quarter the tortoise finally overtook the hare, with growth declining to a significantly slow 2.1% (a far cry from the halcyon days of 10.8% in Q2).

He continues: “The effect is already clear with employment prospects declining by 17 percentage points since Q2 and a whopping 22 percentage points since Q1 as companies reign in their plans to hire, and start to plan based on static headcount at best, and an increasing number looking to make reductions.

“Of note, events are outperforming the market as marketers and agencies look for ways to network, learn and engage with best practice post-pandemic. In parallel, brands and brand leaders are unsurprisingly looking to digital channels to find more targeted, budget-efficient, communication models with traditional advertising falling for the first time since Q1 2021 with online advertising video growing strongly.

One of the disciplines which has seen a major fall is the out of home sector. However, Kinetic Worldwide chief client officer Nicole Lonsdale remains upbeat.

She explains: “During times of economic volatility, predicted to continue into next year, OOH is a trusted and cost-effective channel to help brands communicate during hard times.

“While the Bellwether report shows a reduction in OOH spend for Q3, we estimate good growth for the full year. The Q3 decline is not surprising as we’ve seen a reduction in spend from car brands to promote new registrations, a decrease in fintech brands due to the increase in interest rates and a lack of big-ticket movie releases. The passing of the Queen also reduced spend in OOH, as many brands avoided public advertising during September.

“That being said, we’re predicting further growth as we move in to 2023, more than recouping much of the lost budgets from the pandemic. OOH continues to offer brands more than it ever has, driven by digitisation, automation and real-time data usage.

“With its breadth of creative opportunities, having the highest reach of commercial channels and great social credentials (with 50% of revenues going back to local councils, community and environmental projects), we’re expecting OOH to be back on top form before long.”

Meanwhile, Treasure Data director of marketing for EMEA and India Andrew Stephenson warns that without a sound data strategy brands will suffer.

He explains: “There is a data emergency unfolding in front of marketers’ eyes. As the price of energy soars, economic uncertainty runs rampant and the cost-of-living crisis weakens consumers’ purchasing power, it’s now well-documented that shoppers will be making tough decisions on which products are deemed essential.

“Brands lacking a sophisticated data strategy will have little visibility of whether their consumers are about to leave them on the shelf – or how effective their campaigns are proving.

“And with budgets in most marketing spend categories shrinking, this data is even more crucial so marketers can make the right choices about how to prioritise the budget they have. First-party data – if actionable and efficient – is a lifeline for brands looking to maintain brand awareness and properly connect with their customers at this critical time.

“Marketers must act now and ensure they have a comprehensive data management strategy in place that combines all data sources – online and offline. This is the only way to guarantee that they’re not sleepwalking into a data crisis.”

Trade Desk UK vice-president Phil Duffield agrees that marketers must ensure they keep data at the top of their priority list in the months ahead.

He adds: “There’s no doubt that consumers are re-evaluating their spending, but brands need to recognise the opportunity this presents. Whilst there might be more competition to capture consumer attention, this makes it all the more important for marketers to invest in growing their brand visibility.

“Marketers across all sectors need to implement tailored advertising strategies to keep their brand light burning. Each interaction counts, so using insight to ensure you have the right message, and are amplifying it in the right channel is critical.

“Take streaming for example; despite more consumers planning on cutting back on streaming services, recent research by The Trade Desk revealed over half of Brits are open to a free or cheaper service that is fully or partially funded by advertising. So while fears of a recession might be growing, consumers are just as, if not more willing, to engage with advertisements.

“Now is the time for advertisers who are looking to keep their foot on the accelerator even as growth slows to keep their ear to the ground and invest in data-driven analytical tools to make the most of these opportunities.”

Finally, What’s Possible Group managing director of data, analytics and insight Patrick Mazzotta predicts there will be some big winners and losers over the next 18 months. For every business decreasing their marketing spend, there will be an opportunistic competitor eating their lunch (market share and SoV).

He adds: “There’s a lot of speculation around economic effects of Government policies and we’re seeing the market react quickly to announcements like the ‘mini’ Budget. But with the daily U-turns on these policies, businesses are barely able to keep up, bringing a lot of volatility into Q4.

“Big corporations could be slowed down by bureaucratic budget planning processes while the more dynamic brands can be nimbler, take advantage and find opportunities for more growth.

“My advice is to stay calm and keep a cool head. Looking at macro trends in the market is only helpful if you have a competitive scenario planning framework (i.e., game theory) to plug that data into. Otherwise, it’s more likely you’ll just end up a lemming following the other lemmings off a cliff.”

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