Industry crying out for Brexit decision as spend stalls

digital_disciplines2It seems it is not only Boris Johnson who is banging the drum to “get Brexit done”, the marketing industry simply can’t wait to see the back of it – one way or the other – with the continued uncertainty leading to yet another “underwhelming performance” for marketing budgets during the third quarter of 2019.

According to the latest IPA Bellwether Report, UK marketers recorded a slight reduction to spending availability, with a net balance of -0.5% of firms which registered downward revisions during Q3. However, the report believes businesses will be eager to accelerate marketing efforts once the uncertainty has cleared, and subsequently sees 2020 onwards being more positive.

In 2020, Bellwether expects growth of 1.8%, followed by stronger rates of increase in 2021 (2.0%), 2022 (2.2%) and 2023 (3.1%).

In the meantime, the nitty-gritty of this report does not make great reading for many, with main media ad budgets put on hold and others, including direct marketing (-7%), sales promotion (-2.3%), and PR (-4.7% ) taking a hit.

Even so, as everyone knows, Bellwether still does not include the huge growth areas of the industry, such as technology, data and insight.

And the continued shift towards digital marketing was once again highlighted as the Internet category remained the top performer in the third quarter. A net balance of +11.1% of firms observed budget growth here.

The development of new tools encouraged firms to boost online budgets available to marketing executives. The rampant growth of data-driven campaigns and a greater push towards social media advertising also underpinned the continued rotation into the digital space.

Within search/SEO, which lies within the broader Internet category, however, the net balance declined to +6.1%, from +9.9% in Q2, its lowest since Q4 2018. Meanwhile, mobile advertising budgets were reduced for the first time since the end of last year. The net balance dipped into negative territory (-0.6%) following stagnation in the second quarter.

Earlier this week, the IAB Adpsend report revealed that total UK digital adspend was up 13% year on year in the first six months of 2019 to £7.2bn, as clients embrace video advertising.

IPA director general Paul Bainsfair urged firms to rethink. He said: “It’s a false economy to cut one’s ad budget when things look uncertain. The evidence shows that far from being prudent, it can have a negative long-term effect on growth. Companies that hold their nerve consistently, and that invest in the 60:40 ratio of longer-term brand building to shorter-term sales activation, outperform the market.”

Trade Desk UK general manager Anna Forbes said: “With advertisers’ purse strings tightening, every penny counts, so it makes sense that an increasing number of marketers are pivoting towards the digital space to get maximum value. In fact, the innovations of the past 12 months alone have made it far easier – and more rewarding – for advertisers to do just that. The growth in the digital sector, reported by both the IAB and IPA, stands as testament to the industry waking up to the power of programmatic.

“Particularly notable is the sizeable growth of video, which contributed well over £1bn in the first six months of the year according to the IAB. Advertisers have long known that video is a powerful format to reach consumers, but its power is likely to grow exponentially as more and more connected TV streaming services enter the UK market. And with UK consumers creeping ever closer to subscription fee saturation, advertising will be a key asset in unlocking new revenue for many streaming companies, further boosting an already flourishing sector of UK ad spend.”

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