New figures from this week’s Advertising Association/WARC Expenditure Report reveal that, despite a few bright spots, the industry is still suffering a hangover from the second half of 2022, with forecasts revised down for this year.
While the report draws its own conclusions Decision Marketing quizzes industry chiefs to gauge the mood of the marketing nation.
Wavemaker UK chief strategy and planning officer Elliott Millard believes it would be easy to wring our hands about the importance of defending spend on brands – which is true – but a closer look at the report reveals a key trend.
He explained: “While almost all channels show a dichotomy between ‘digital’ and ‘total’ investment (TV is 1.5% down, but BVoD is 15% up, news brands are down but digital news brands are up etc.), there are two channels that diverge from that trend. The first is out of home, where spend at a headline level has grown faster than spend in to digital, and the second is cinema which has grown at a monster 123% vs total ad-spend at 8.8%.
“Obviously, there are underlying trends for both channels – 2021 was a year where lockdowns constrained our ability to spend time in cinemas and outdoors. But this isn’t the only thing influencing this spend movement. The UK is more divided and polarised than ever before. We are deep in a cost of living crisis and have been in political turmoil. At the same time, advertising is less trusted than it has ever been.
“At moments like these, people seek familiarity, they seek unification, and they seek togetherness. That’s why cinema and OOH are so powerful right now – they are public, which means they’re trusted, and they’re a shared experience which means that advertising (or at least the best advertising) is a part of that shared experience. The bravest brands will find ways to turn that to their advantage by being more public, more emotional and more unifying. And by doing that, they’ll be more trusted by the public during a crisis.”
Perhaps unsurprisingly, Pearl & Dean chief executive Kathryn Jacob sees the recovery of cinema advertising as a major boon. She said: “Despite a challenging economic climate, it is great that advertisers continue to see the value in cinema and its power in communicating a brand’s message on a big screen with zero distractions.
“There are huge creative opportunities to capitalise on cinema over the coming quarter – not just via on-screen ads that position brands front and centre but also tapping into the whole experience of cinema and film, through partnerships both on and off screen.
“There is such an exciting slate of films coming up – from family favourites from The Little Mermaid and Barbie to highly anticipated sequels like Indiana Jones, Mission: Impossible and Dune: Part II – there’ll be huge opportunities for brands to take advantage and reach a targeted and engaged audience.”
And Kinetic UK chief client officer Nicole Lonsdale is equally enthused about out of home media. She explained: “Attributing the strong growth in OOH to bouncing back from the Covid pandemic only tells one part of the story. Sustained investment in new technology and data meant OOH was well placed to weather national lockdowns and then adapt at pace to reach the huge audiences that OOH commands as work and travel behaviour resumed in the immediate aftermath of the pandemic.
“More recently, technology has been a springboard for brands to really explore the creative possibilities of OOH and drive genuine growth in the sector. Over the past 12 months we’ve seen higher investment in programmatic digital OOH campaigns, dynamic creative activations becoming more mainstream, and the launch of 3D OOH at scale. Far from simply recovering, OOH is thriving and it’s no surprise to see the sector forecast to out-perform the wider industry in 2023. In fact, our predictions are that this growth will be larger than originally forecast.”
Even so, despite these two growth areas, Tribal Worldwide London chief client officer David Balko reckons brands need to be clever in how they are communicating with consumers, arguing that successful communication during tricky times has proven to be fruitful for brands.
He added: “While the looming recession presents challenges, brands should ensure that they are providing powerful, joined-up brand experiences that extend beyond communications and into long-lasting brand-to-consumer relationships.
“The unstable economic landscape proves to brands how essential it is to have a strategy and plan in place. There are still many opportunities for brands to succeed during difficult times and companies that ensure their brand investment cuts across all aspects of brand experience will come out on top.”
Meanwhile, BrightBid CEO Gustav Westman insists the report demonstrates that, even during economic downturns, brands recognise that search advertising offers measurable results and efficient use of marketing budgets. With more advertisers competing for the same target audience, however, this creates an inflationary spiral and increases cost per click (CPC) rates.
He added: “To stay ahead of the curve, marketing teams need to take advantage of the current generative AI revolution in search and the benefits this offers. The impact of multimodal search experiences, coupled with the capability of AI technology to produce highly-targeted and precise search results, will provide a cost-effective, swift, and low-risk marketing approach to combat the rising CPC rates, thereby keeping businesses ahead of the competition.”
And Recurly EMEA general manager Oscar Wall warns that, as the cost of living crisis persists and minimal growth is forecast for the rest of the year, marketers need to shift their focus to retention and increase the value offered to their customers.
He added: “While discounts may attract high-intent consumers, recurring revenue businesses need to invest in exclusive content, explore pricing strategies and deepen brand loyalty incentives and bundling can help justify the price and develop long-term customer relationships. Subscription businesses should use these retention strategies so that brands see value in their advertising investments.”
For Kite Factory managing partner of strategy Rik Moore, however, the report tells two stories: “Firstly, the short-term reality of where we are now, and secondly, the longer-term potential of where we can get back to, based on what we saw at the start of 2022.
“This new data reinforces the pressure advertisers are under caught between rising prices and a customer base impacted by the cost of living crisis, hence the reason for the downfall in spends in Q4. The fact this is the first fourth quarter drop since 2009 reflects the stark severity of the situation we’re in.
“The key question for marketers now is how best to navigate 2023, and the tactics deployed will depend on where you find yourself. As noted at the IPA’s EffWeek 2022, by Dr Grace Kite of Magic Numbers, advertisers in this economy fall into one of three groups – Victim Sectors, Secure Sectors and Beneficiary Sectors. Establishing which group you are in will help you decide how best to navigate the outlook that this AA/WARC report outlines.”
But VaynerMedia EMEA head of strategy Allan Blair claims it is easy to read the latest figures and be dismayed – but they do not reflect a few real issues in advertising – which, the longer we ignore, the more difficult things get.
He added: “Yes, budgets are squeezed. But we fundamentally believe that agencies need to stop the art of selling creative ideas and acting like high priced consultancies before shipping them off to production studios or other departments within their business. That’s why work is so expensive. And it’s why bringing creative, strategy and media together can create enormous cost efficiencies.
“It also allows the work to stay closer to the brief, reducing constant back and forth between partners and, you guessed it, clocking up further hours at high rates. Plus, the more integrated your team, the less chance of misinterpretation or diluting the brief. Which not only leads to more expensive work but less effective work too.
“Finally, it’s time for our industry to accept there isn’t a lack of talent out there. If we want a more diverse industry, we need to start hiring people from all kinds of backgrounds, disciplines and other sectors, rather than panicking that Oxbridge educated folks don’t want a job in advertising. The creators at the forefront of culture, which is being built on social, are out there. They are the people we want to help us build modern brands.”
However, Cream co-founder and CEO Neil Cunningham reckons the sector should go even further, with the current economic climate opening up an opportunity to rethink more fundamental aspects of marketing and advertising.
He explained: “How can we work with Government and other businesses to address talent shortage across the space? How do we establish where AI adds value in our internal and external processes, catalysing not marginalising innovative thinking?
“We must also consider how advertising interacts with local and global ESG objectives – what role could, and should our industry play in steering businesses and brands towards a more sustainable and equitable future, and how quickly can we elicit lasting change?
“We are set for a year of planning across the board as we move through 2023, in preparation for trading conditions to improve next year. Smarter research, increased data collection and more holistic measurement can allow marketers to better understand the current advertising landscape. This will help to reap the rewards of spending in a more rational and evidence based way rather than relying too heavily on intuition and habit.”
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