Reasons to be cheerful: Bellwether shows marketer confidence holding up despite headwinds
Now brands and their agencies have navigated the first quarter of 2023 they have a better idea of the challenges ahead. The pressures of the cost of living crisis, inflation and the demand to demonstrate return on ad spend will be present throughout the year – but there are signs that confidence is still relatively strong among marketers.
The latest IPA Bellwether Report shows that in the first quarter of 2023 21.1% of businesses increased spend versus 12.9% reporting budget cuts, giving a net balance of 8.2%. This is higher than the 2.2% reported for the last quarter of 2022 when the FIFA World Cup and Christmas were purportedly both big magnets for ad spend.Bell
Looking ahead, and bearing in mind those strong headwinds, the Bellwether report offers a level of reassurance. More than a third of marketers (36.6%) expect greater levels of spend in real terms for 2023, while 16.9% expect cuts – making a net balance of 19.8% (compared to 24.2% in the last report, so there is a fall but not a steep one).
As Ryan Storrar, CEO of EssenceMediaCom X, commented: “Cautious optimism is a key phrase here, and echoes what we’ve seen in our own predictions for the year ahead. While it’s clear that many brands have had to prioritise their marketing tactics and cut back in many areas, the fact that many still plan to expand their marketing budgets shows that advertising plays a prominent role in their future proofing efforts.”
The granular picture
On a more granular level the picture is nuanced. As you’d expect, some marketing services are better positioned for growth than others. The Bellwether suggests ‘Main media advertising’ is set to perform strongly, as is Direct Marketing and Events – clearly there is still a hunger to engage customers face to face post-pandemic.
Sales Promotion enjoyed the biggest upward revision to current spend, reflecting the cost of living and efforts by brands to keep market share by discounting. There’s no reason to expect this to falter – though brands should be keeping an eye on their brand building activity for when the economy truly bounces back.
Liz Duff, head of commercial and operations at Total Media, says that the growth in main media marketing shows that marketers are continuing to support brand activity, and the expansion of sales promotion budgets demonstrates a commitment to using short-term measures to achieve success. “Overall, these findings bode well for the marketing industry in the UK, and we can anticipate further developments as the year progresses.”
Businesses do need to accurately reflect their consumers’ financial position in their marketing materials. For instance, Asda’s new loyalty scheme – focused on the tagline ‘Pounds, Not Points’ – acknowledges its audience’s desire for tangible monetary rewards over nominal points-based incentives. An empathetic stance will build greater consumer trust.
Mine insights for opportunities
When the Bellwether takeaways on confidence are combined with data from other sources, we can see there are still plenty of opportunities in certain sectors. Insights gleaned from Winmo and Adbeat show which brands within sectors are actually upping their ad spend quarter on quarter.
Within Entertainment, brands like Apple, YouTube and Sky+ have all upped their ad spend, probably reflecting the stay-at-home choices of many consumers. But Travel also retains its appeal with many people still wedded to the idea of a holiday – reflected in easyJet’s recent financial results. In the sector high ad spends include British Airways, Virgin Holidays and Jet2Holidays. Telecoms brands like EE, Three and Tesco Mobile are also spending significantly.
Understand client concerns
The path ahead for 2023 will undoubtedly be bumpy and agencies are going to have to remain agile, alert and willing to invest in new services, if that’s what clients request.
Understanding client concerns at a fundamental level and being able to help address them should be an agency’s guiding star in this fast-moving landscape. Marketers are grappling with delivering ROI, monitoring and responding to consumer behaviours and showing empathy to hard-pressed customers. At the same time many are dealing with big internal organisational changes and tasked with bringing products to market at speed as their own businesses pivot and hunt for opportunities.
Our recently published Business Development Playbook takes a deep dive into these marketer priorities and sets out strategies to help agencies maintain their relevance and strengthen the client-agency relationship. Download a copy here.