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UK: IPA Bellwether Q4 2019 – Digital spend to soar 8%

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As Boris Johnson set out to “get Brexit done” in Q4 2019 and sent the public to the polls to vote in the “Christmas General Election”, the result has brought with it more certainty for the marketing industry. At least, this is what the latest Bellwether report from the Institute of Practitioners in Advertising (IPA) signals as total marketing budgets increased for the first time since the first quarter of last year.

The start of 2019 showed signs of optimism only to be followed by two consecutive quarters of stagnant spending activity because Brexit uncertainty, client hesitancy and weak confidence delayed decision-making. However, of the 300 UK marketing professionals surveyed in the latest survey, 4% had immediately revised their total marketing budgets higher in the last quarter of the year following the general election.

And the trend looks set to continue, as the preliminary outlook for marketing spending in 2020/21 appears bullish. Nearly 16% of companies now expect their total marketing budgets to be upwardly revised as uncertainties diminish.

A number of panelists still expressed concern regarding the outcome of Brexit, but others expect to see a bounce in business following the General Election result and the subsequent alleviation of political uncertainty. 

Either way, the latest Bellwether forecast predicts 2020 will be a strong year with an annual adspend growth of 1.8%, and increased improvements being seen in 2021 (2.0%), 2022 (2.2%) and 2023 (3.1%) respectively.

The latest Bellwether survey also saw budgets for internet marketing increase by 7.9% as businesses look to pursue data-driven advertising campaigns, embrace new online marketing technologies, and build their social media presence.

Commenting on the latest findings, Paul Bainsfair, IPA Director General said: “This latest IPA Bellwether Report demonstrates the extent to which UK marketing budget planning has been at the mercy of the unstable political environment. Over the past year we have seen a stagnation in marketing budgets, culminating in a below zero score last quarter. And yet now, with the clear result of December’s general election, we are seeing a return to positivity in terms of UK companies’ confidence regarding their own financial prospects and in terms of their budgeting plans.”

Joe Hayes, Economist at IHS Markit and author of the Bellwether Report comments: “There were a number of positives to take from the fourth quarter Bellwether survey. The rise in total marketing budgets provides tentative signs of a momentum shift, particularly when coupled with preliminary data for the 2020/21 budget year. It appears that firms are looking to release the pent-up investment which has been put on hold amid the high degree of political and economic uncertainty which has plagued the UK business climate for well over 12 months now.”                                                     

What’s New in Publishing additionally spoke to several industry representatives for their reaction to this latest IPA Bellwether report:

“I see this as a much-needed reset button for the industry”, says Amit Kotecha, Marketing Director at Permutive, further commenting on the challenges that online advertising will face around third-party data issues:

“Once again, internet advertising was the ‘stand-out’ performer in the IPA’s latest Bellwether report, which saw the marketing industry as a whole rally after a disappointing start to 2019.

“What the report does not touch upon, yet which is of key importance moving into 2020, is how data-driven advertising is under greater scrutiny than ever before. GDPR, CCPA, the ICO’s ongoing probe into real-time bidding and browser changes all continue to disrupt the foundations that most digital advertising is built on.

“While overall advertising spend is predicted to grow by between 2 and 3.1% in the years to 2023, the challenges that online advertising will face around third-party data might see publishers’ revenues decline in the short-term. Privacy will become paramount to all in the ad industry bringing advertisers and publishers closer together to find solutions to trade media. This is a huge opportunity for all.”

“With certainty comes the ability to plan…” Justin Taylor, UK Managing Director at Teads commented on how the December election has now brought some clarity on the way forward for UK plc:

“The uptick in advertiser confidence sits nicely in line with similar improvements in consumer confidence. The December election seems to have brought people together on at least one idea, that there is a definite and clear direction for the UK now. And with certainty comes the ability to plan, trade and execute for brands and agencies alike.

“We have certainly based our 2020 on a resurgent market, with clients looking to engage the attention of a more bullish consumer.

“What we are also seeing is a focus on responsible advertising. With clients wanting to showcase best-in-class creative within real media environments – those that are professionally produced, editorially curated and targeted.”

“It isn’t about a race to the bottom in terms of technology costs.” Sonia Pham, Head of Business Analysis at Illuma Technology explained how marketers will need to understand how technology can bring wider efficiencies:

“The report shines a spotlight on some interesting developments in online advertising, where modest budget gains are being driven in part by new, data-driven advertising technologies. One of the main opportunities with new technologies is that they bring efficiencies in spend; so as budgets begin to grow again, the challenge will be for the technologies themselves to communicate these efficiencies to budget-holders.

“Of course, it isn’t about a race to the bottom in terms of technology costs, which often leads to heavy compromises in delivery and service. Rather, marketers will want to understand how technology can bring about wider efficiencies by leveraging the good work of their existing strategies in intelligent ways to ensure it’s a case of expanding success rather than limiting scope.

“…Fake news, interruptive or negative ad experiences have had a negative impact of the media industry as a whole…” Alexander Erlmeier, Managing Director, International at Outbrain outlined the importance of rebuilding trust to give advertisers the confidence ads are reaching the right audiences:

“2019 was a turbulent year for the UK and it is encouraging to see a more positive outlook from advertisers in 2020. The continued growth of digital marketing in the UK is aligned with trends we are seeing in other markets across Europe, in large part due to the growth of smarter digital advertising solutions and programmatic buying.

“We expect that a big focus in 2020 will be around trust and quality ad experiences. Factors such as fake news, interruptive or negative ad experiences have had a negative impact of the media industry as a whole, and we have a shared common goal to rebuild that trust, and give advertisers the confidence that their advertising is reaching the right audience, in the right way and driving real results.”

Further investments in data initiatives will play a significant role.” Chris Hogg, Managing Director EMEA, Lotame explains why much of the growth in digital ad spend will be on data-driven strategies, especially in light of Google’s announcement this week that it intends to make third-party cookies obsolete within the next two years.

“The shift toward data-driven strategies and data technology signals a growing appetite from businesses to build a panoramic view of the customer. While a company may collect its own slice of data about its customers, these data assets will only give a limited view of the consumer. 

To increase digital efficiencies, businesses need to look for advanced data synergies and partner with companies that can offer additional data to round out that view of the customer. The trend of serving the customer by getting to know them better has remained a major priority, with businesses continuing to invest in online tools to bolster their digital presence. We predict that efforts in this area will help to unlock revenue streams – especially given the recent seismic changes to how data is collected, connected, and permissioned.”