The latest IPA Bellwether report has seen marketing budgets, outwith online budgets, forecast down for the second consecutive quarter as a result of continued global economic uncertainly. The Drum approached some of those involved in the marketing industry for their reaction to the latest figures.
Keith Hunt, managing partner, Results International
"The latest Bellwether report certainly makes for depressing reading. Yet it’s important to remember that not every business in the industry is suffering. What we are seeing are winners and losers with some digital disciplines doing better than more traditional areas. In our work we see agencies in high growth areas such as data and digital doing well as marketing executives recognise that they deliver the best returns for their brands. Agencies with a more traditional skill set should be thinking hard how to get a better ROI or getting into these growth areas themselves, fast.
"Agencies should choose their clients carefully. It’s more important than ever in this climate to back winners in growth industries. Build strong relationships with such clients and offer them the services they want to buy. This is increasingly likely to involve highly targeted marketing comms with a large helping of digital in all its guises together with data analytics.
"Clearly it’s tough out there. A lot of projects are being delayed and it can be many months from winning a pitch to sending out the first invoice. The whole decision-making process has slowed down massively. Then there is an issue affecting brands’ take-up of growth areas such as social media and mobile. These are still relatively new and haven’t traditionally had budgets allocated to them. In other words it’s hard to create a budget where there hasn’t been one before and this is slowing down adoption of mobile and social media."
Jason Cromack, CEO, at Lateral Group
“The 6.2 per cent increase in search internet spend indicates that online channels are demonstrably more measurable than traditional media and therefore are easier to manage in terms of delivering more targeted messages. This is precisely what is fuelling their ongoing success in the downturn. In addition, data-driven insight also enables marketers to create smaller targeted mailings with less wastage.
“Marketers should ensure that despite budgets being limited, they are using data-driven campaigns to underpin targeted communications and build profitable relationships with their audiences.”
Jenny Biggam, founder of the7stars
“Given the increasing ubiquity of smartphones and tablet devices, it’s no surprise that digital and mobile are faring comparatively well. At the moment they are offering the best targeting opportunities as well allowing brands to be more innovative and creative in the way they approach their marketing, and have the added advantage of being a more direct route to the consumer allowing for greater accountability. We’ve certainly seen this reflected in demand from our clients – our digital division is now the fastest growing area of the agency due to the continued migration from traditional media to digital.”
Mark Osman, director of commercial operations at Eclipse Marketing
“It is no real surprise to see that the tough economic conditions that companies find themselves in has seen marketing budgets continue to struggle. However, it is particularly disappointing to see that direct marketing is suffering more than most when it comes to reaching consumers. It can be highly targeted and measurable - vital in a downturn. The time and cost effectiveness that digital offers in comparison to other channels means that digital now accounts for the lion share of direct marketing, although we still see a notable increase in response rates when multiple channels are combined as part of an integrated campaign.”
Nick Jefferson, MD, gyro London
"Work comes home. Home comes to work. Our lives are portable. And the devices we are using, iPhone 5, Kindles, are only getting faster and better. It makes perfect sense that more spend would gravitate to digital. It also makes sense that there is a greater emphasis on SEO and being found. The crowd is arriving in throngs to digital properties and like with any channel it’s up to marketers to stand out."
Andy Bird, co-founder and executive director at Brand Learning
"These challenging economic times require marketers to step up their game now more than ever.Marketers must keep a positive mindset rather than getting sucked into the doom and gloom, as in all times there will be winners and losers. As competition intensifies for a smaller pot of customer spend, those marketers who can truly deliver exceptional customer value will win out. And doing this in an honest and open dialogue with customers is likely to further your chances of sustainable growth – yes, even in today’s tough times."
Dan Todaro, MD of Gekko
“Today’s findings don’t come as a massive surprise – we are, after all, in tight times financially and the gut reaction for many brands is to focus spend on rapidly developing areas such as online and search. However, recent Gekko research shows that despite the decrease in spend shown here in the Bellwether, FM in particular still has huge value, and indeed can boost and increase sales for brands if executed correctly, even with limited budgets in place.
“The survey revealed that 44% of consumers would be more likely to buy tech products and gadgets if they’d had a product demonstration or other brand interaction in-store, and a third (32%) said that this activity would tempt them to spend an additional 20% on products and accessories. Surely this is an argument for brands to re-think their spending strategy and reap the clear rewards that FM activity has to offer? It’s true that marketing budgets will continue to be squeezed, but listening to what consumers want and what makes them buy is ultimately the best way to predict and achieve success.”
Renee Joyce, marketing manager at Tangent Snowball
“Research from periods of economic downturn has consistently shown that brands which invest in marketing are the ones that grow market share and revenue. It’s up to agencies to continue to work more closely with clients to understand the real pain points and devise strategies around this with tangible measureable outcomes.
“Our clients are fighting harder to maintain their budgets, let alone increase them. Procurement and finance staff are now often involved in pitch negotiations – this intense scrutiny of every pound can lead to devaluing the expertise of the agency, especially the creative expertise.
“With budgets under pressure, the key for maintaining a marketing budget will be ensuring that effectiveness is measured. Agencies need to lead this charge and improve the regularity and depth of project and campaign measurement so clients can more clearly attribute ROI and fight the corner for marketing investment. Data will play a key role in this and again it's up to agencies to ensure clients grasp the importance of data and develop data strategies that span the depth and breadth of campaigns.
“The rise in online advertising and internet spend and the decline in DM and media are an indication that clients want more measureable campaigns. Online advertising can be tracked all the way through to the end goal and therefore an accurate ROI can be attributed, in addition the data captured about the customer can be fed back into future campaigns. DM and media certainly still have their place in the mix but the challenge in measuring their impact is making it more difficult to justify the spend.
“Agencies need to provide a fully integrated service to clients to offer value – a mix of business consulting, marketing strategy, creative and solid technology will help clients solve a variety of problems at once. They’ll also be looking for expertise that can manage the breadth of the channels that they operate in therefore integrated agencies with deliverability across the channels will have shiner prospects in 2013.”
Simon Guest, business strategy director at Maverick
“As companies reduce their marketing budgets many are looking at alternative ways to drive business growth from within their organisation. CEOs and business leaders are switching their attention to how they can improve operational effectiveness by engaging their people and aligning their stakeholders around an easily understood strategy and proposition. This often leads to an increase in the budgets allocated to internal communications and employee engagement, and there is a growing trend of organisations seeking out suppliers that can help brands to redefine their proposition, differentiate their offering and open up new commercial opportunities in the global market.
“Communication agencies which can support their clients in a truly consultative way, across all aspects of commercial development and brand engagement, will be the ones who add tangible value to their clients, helping to facilitate business growth from the inside out.”
Mike Spicer, CEO at Pulse Group
“The report is a completely accurate reflection on financial constraints the industry is facing at the moment. There is no doubt that online spend will continue to increase at the detriment to traditional offline direct marketing whilst the economy remains the same.
“However, what we can’t lose sight of is the importance of delivering the right message through the right medium. Although it might sometimes seem that budget’s dictate that spend has to go online, there is always scope to standout and trigger action through offline innovation and doing things a little differently. At the heart of every successful campaign is a simple idea that is created through genuine insight, what channel that is delivered through should be dictated by the individual not the budget.”
Tim Hipperson, chief executive of G2 Joshua
“As the marketing industry continues to face a challenging economic outlook it is vital that marketers centre their efforts on mapping back to customers’ actual needs and reacting to them quickly in a seamless manner, rather than investing in expensive and inefficient marketing channels which do not effectively connect with the consumer. The latest IPA Bellwether report paints a gloomy outlook on marketing spend for the rest of the year, however, if the priorities of customers are put at the forefront and acted upon with immediacy through the use of intelligent and connected marketing, then 2013 will offer a far more prosperous picture. Cash-strapped consumers are looking for brands that offer them relevancy, engaging content and value for money delivered as soon as they request it and the marketing industry needs to tap into these demands to reap the rewards.”
Matt Isaacs, CEO at Essence
“The latest IPA bellwether show that the shift of media spend from offline to online is continuing at pace. This trend will inevitably continue but the boundary between traditional and digital is set to become very blurred as on demand TV and online video formats start to make inroads into what has historically been TV's domain. This quarter marks a turnaround on last when online search grew faster than online media and the stats reflect a growing acceptance amongst advertisers that online is not just a bolt-on but can be central to brand-building efforts. As a result more spend is being channelled into online display, which offers greater brand opportunities than search marketing.”
Ian Stockley, MD at Indicia
"The relentless onward march of internet spend just serves to indicates how important consumer insight and granular targeting has become when it comes to the marketing priorities of budget holders.
"Marketers have to keep pace with consumers and data is fundamental to this. Understanding and analysing customer data is crucial as a means of harnessing online media and engaging emotionally with consumers to create a value exchange in which both parties benefit from sharing information.
“The challenge for brands now is how they progress this. It is not simply a question of data-gathering; brands must not only examine their marketing channels, but also their budgets, organisational structure, customer data, creative solutions and technology. Those brands that use customer insight to underpin their marketing activity will be those with the edge in the market.”