Bellwether reaction: Learn how to protect against frost

The latest IPA Bellwether Report shows the green shoots which emerged earlier this year have now been caught in a nasty frost, as clients become increasingly cautious over how the economy will perform under the new Labour Government.

While some disciplines – notably direct marketing and events – continue to thrive, others are being reined in. The report draws its own conclusions, but Decision Marketing quizzes industry chiefs for their take on what it all means for the sector and beyond.

First up is Imagination global CEO Patrick Reid, who reckons the Bellwether paints a picture of an industry in limbo, awaiting fresh budgets amid geopolitical uncertainty. Yet, even in challenging times, for the eleventh consecutive quarter, events marketing continues to rise.

He says: “This is because human connections matter. Live events bring unmatched energy, creating multi-sensory, immersive experiences that move people and leave lasting memories. In today’s competitive landscape, brands that tap into these emotions – making people feel something real – are the ones that build lasting loyalty.”

Meanwhile, TBWA\MCR chief executive Fergus McCallum believes the political “back seat drivers” have never been more vocal than in the days since the latest general election.

He explains: “The new Government’s approach to attempting to be the party for ‘working people’ and the party for business certainly presents a tricky challenge. All eyes will be on them as they navigate these two sides but the uncertainty is having an impact as seen in this Bellwether. What is clear is that businesses have pressed pause to wait and see what will happen next.

“While company-specific financial prospects are downbeat, there are positives – main media budgets expanded at their fastest rate in a year and adspend forecasts lifted for 2024 and 2025.

“So, optimism remains. Let’s hope the Chancellor takes note. The Budget needs to address this business uncertainty. Labour must follow through on its manifesto to build British industry, create jobs and grow the economy.”

LiveRamp UK managing director Hugh Stevens, however, warns that marketers should be cautious about swiftly pulling back budgets, even in the short term.

He explains: “Experience has shown that brands who maintain marketing spend through precarious economic straits often rebound the quickest. In the same vein, they should also be conservative toward promotion activity, as consistently lowering prices can damage brand value and will therefore hamper businesses’ ability to scale revenue in the future.

“However, there are some signs that consumer confidence is buoyant. With easing inflation and an expected relief in the cost-of-living crisis highlighted across those vertical respondents in the report, including FMCG and retail, marketers should focus on targeting their high-value audiences with the greatest propensity to spend.

“The key to this is first-party data, which provides rich insight into customer behaviour, including buying intent and interest. When combined with partner datasets through data collaboration, this unlocks a full 360 view of the customer’s purchasing journey across channels and platforms. Brands can use this oversight to optimise their media targeting and planning, improving outcomes and driving long-term business value.

“Now is the time to embrace data collaboration and ensure your brand is front and centre with customers.”

Acxiom CEO International Alex Pym reckons it is even more crucial that brands adopt a strategic approach to how they allocate their resources. While the economic landscape remains challenging, there are still opportunities for companies to leverage their customer insights more effectively, helping maintain relevance and boost engagement with their key audiences, he maintains.

Pym continues: “Even in difficult times, the demand for personalised, data-driven experiences stays high, with consumers still expecting tailored interactions from the brands they engage with. Rather than cutting back entirely, businesses should streamline their marketing strategies and ensure that any investment in data intelligence and personalisation is laser-focused on delivering measurable results.

“Tough times call for smart marketing. Leveraging data to better understand customer behaviour can help brands weather the storm and set the foundation for future growth.”

For DoubleVerify regional vice-president of Northern Europe Anna Forbes, it is imperative that advertisers harness solutions that will help them navigate nuanced brand safety and suitability challenges while still driving performance.

She explains: “This is especially important in formats where investment is increasing, including video, as highlighted in the report. As money flows into these areas, bad actors inevitably follow, including those behind sophisticated ad fraud schemes.

“While AI is driving challenges, such as low-quality made-for-advertising sites and disinformation, it also provides solutions to counter these threats. That’s why it’s encouraging to see many companies in the IPA Bellwether already integrating generative AI into their strategies. AI is proving to be a powerful tool for analysing and optimising media, ultimately enhancing brand performance and driving business outcomes.”

And PrimeAudience vice-president of product Mateusz Rumiński, is another who believes AI will be crucial in the coming months.

He says: “As brands are trying to become more efficient, the number of impressions they want to use to deliver this impact is constantly decreasing. This means campaigns must be as effective as possible. Video ads are an excellent example of this, as they are more expensive when measured per impression, yet effective in driving engagement and impact, which is likely why budgets for these are on the up.

“But what is the solution? As we approach 2025, marketers should utilise advanced AI technologies to ensure consumer experiences resonate, with enhanced creativity, improved campaign effectiveness and boosted ROI. Generative AI, in particular, has the ability to process vast amounts of data, allowing for more precise audience targeting, content creation, and campaign strategies.

“These capabilities will be instrumental in the future of advertising, and given how turbulent the upcoming months may be, now is the time for brands to get on board and rise above the competition.”

The final word goes to Medialab head of marketing effectiveness Anthony Pey, who points out that the growth of main media spend is due in no small part to the upward revision in video budgets of +11.7%, which reflects his agency’s experience of clients now considering AV not just as a channel for brand, but also for performance.

He continues: “It’s interesting to see marketing research budget down by 1.5%. We feel that with uncertainty still prevailing, investing in a data-driven approach is vital to ensure that every penny spent is accountable and contributes to ROI. Advertisers should expect transparency from their agencies on how their budget is allocated and data-driven decision-making that ensures it is optimised effectively.

“What this report highlights more than anything is the need for advertisers to take a long-term approach. This means not just focusing on acquiring customers in the short term but also retaining them for the long term.

“Brands that start to prioritise the lifetime value of customers will set themselves up to weather whatever changes occur in the macro environment. Brands that invest through past uncertainty generally capitalise on those past efforts with stronger brand health metrics than their peers.”