Agencies should be reassured by the latest Bellwether report but make sure they invest resources in the right areas

While not ringing in a new dawn, the latest IPA Bellwether quarterly report on budget spend and marketer conference is quietly reassuring.

The Q1 numbers are robust enough – there’s a net balance of 9.4% of marketers revising budgets upwards in the quarter (versus the previous quarter’s 14.7%) and this continues a solid run of growth stretching back to 2021.

Strengthened budgets should mean new business opportunities for agencies. Looking ahead marketers are showing confidence for budget setting in 2024/25. Just over 40% of the IPA survey panel have boosted the total amount available for marketing in coming months, compared to 18% reporting cuts. This gives a positive signal for budget setting over the next year.

The Q4 2023 Bellwether was exceptional in showing the strongest upwards revisions in budgets since 2014. Given current economic headwinds and global uncertainties, a dip in Q.1 was to be expected but as the IPA said: “It was nevertheless the second highest [upward revision] in almost two years and pointed to a solid quarterly expansion.”

Agencies will be interested in which categories showed growth in Q.1 to see where they should be putting more resource, developing new services or seeking out useful partnerships.

Investment in Events leaps out in the report – there is still a big hunger to engage with prospects, clients or consumers face to face, while Direct Marketing is still showing sturdy growth, as is PR. There is a cooling for ‘mainstream media’ but the first quarter follows big budget investment in the final quarter of 2023 and the holiday season. The coming summer of sport with the Olympics and Euro 2024 may see a refocus on mainstream media.

Such frequent shifts back and forth in channel investment suggests brands are having to cover a wide waterfront and need a variety of agency partners to create content for the myriad media and help to reach fragmenting audiences.

The specialist versus integrated agency debate rolls on but such a complicated marketing landscape presents marketers with big challenges. Group Chief Marketing Officer at NatWest Margaret Jobling gave a straightforward opinion recently when she said: “Agencies that say they can deliver every single specialism is nonsense. You’re always trading off something, somewhere,” which means there is plenty of opportunity for niche services.

Looking at which businesses are leading in marketing investment, sales prospecting tool Winmo’s Top Advertiser’s report is mainly populated by ecommerce, retail and travel brands – Camerich, Boots, Experian, Kenco and Dreams all feature in the Top 10, along with Apple.

Pitching opportunities are holding up but agencies need to rigorously monitor their own marketing costs and invest in effective activity, while choosing carefully which opportunities to pursue. As Propeller’s Chief Growth Officer and expert on agency new business Jody Osman says: “Many agencies saw a flurry of pitches in the first quarter of 2024, with some agencies up to 5–10 pitches each month. However, this puts a big pressure on agency resource, time and finances.

“Many agencies have seen the cost of pitching increase, whilst decision making has taken longer and cancellations have risen. In this fast-paced environment, it’s crucial to navigate wisely and agencies need to put increased focus on qualification and investing in winning the right type of business.”

Our new Propeller publication, titled Navigate Innovate Grow – A Marketing For Growth Playbook, 2024, is packed with advice and tips for navigating the challenges of new business and is available for free. Download it here.