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Marketing Media Planning and Buying IPA

As IPA Bellwether finds CMOs glum in face of recession, here’s what you need to know


By Sam Bradley | Senior Reporter

October 19, 2023 | 8 min read

Two studies released this week find brand marketers struggling to find commercial optimism – though key media spend patterns provide reason for encouragement.

ipa bellwether

The IPA Bellwether report predicts a small recession next year / Unsplash

The latest IPA Bellwether report suggests marketers are holding on to budgets ahead of a potential recession next year. Though core media spending held up in the third quarter of the year, the IPA’s survey forecasts advertising spending will fall in real terms until 2024.

Paul Bainsfair, the IPA’s director general, says “the trading environment for companies is unquestionably tough.”

The Bellwether surveys a select panel of 300 UK companies and is released each quarter. Over 20% of the survey’s respondents said they were not confident about the financial prospects of their organization over the next three months. The report found that industry-wide sentiment had reached its lowest level yet this year, with the proportion of respondents ‘downbeat’ about the outlook for their sector 24.9%; just 12.1% said they felt positive about commercial outlook.

Similarly, a survey of 400 US marketers by advisory MediaLink this week found 74% pessimistic about growth prospects over the next year (and 31% said they were “very pessimistic”).

James Coulson, managing partner Kepler EMEA’s consultancy practice, says the IPA’s findings show marketers’ optimism is “capped.”

“In these continuing ugly times for geopolitics, domestic and global economies, brands have kept their optimism capped. A persistent downbeat view of their own sectors, and only marginal net increases in self-confidence (which on closer inspection is underpinned by a substantial range of positive and negative confidences - not good for market stability) doesn’t look to be changing any time soon,” he argues.

S&P Global Intelligence estimates that the UK will experience a “shallow” recession next year, equivalent to a 0.1% decrease in GDP, with a 1.4% dip in overall business investment at the same time. The IPA forecasts that ad spend will fall 0.6% this year and 0.4% over the course of 2024.

In addition to lower sales in a recession, the survey’s respondents identified a range of other threats – including supply chain disruptions relating to Brexit, inflation, the impact of high interest rates upon borrowing and the amount of disposable income available to consumers.

More positively, the survey suggested that marketers had begun to turn away from discounting and short-term promotions after a rise in that activity was reported earlier this year.

7.4% more companies increased their investment in core media advertising (including TV, online video and broader digital) compared with the previous quarter, while the number of companies investing in discounting and promotions fell 1.5%. In contrast, other media categories saw less spend.

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Rachel Macey, head of TGI agency partnerships at Kantar Media, says: “Our latest data shows that audio and out-of-home (OOH) are holding up well in terms of audience engagement. 83% of all British adults claim to listen to radio and 28% say they listen to podcasts once a week. 42% of adults are likely to notice OOH advertising when traveling, and for 17%, OOH advertising improves their perception of the brand. None of these figures have seen any meaningful decline in recent months or years and some have seen rises, so it’s interesting to see that spend has been pulled back on these.“

She suggests that brands might be adopting narrower media plans in order to address shifting consumer behaviors. “We know the value of being forensic in identifying target audiences for campaigns and it could be that marketers are pinpointing specific consumer groups in other areas. The cost of living crisis is dramatically reshaping people’s habits and attitudes and brands have to understand what this means for them,” Macey adds.

Bainsfair took the core media findings as a positive. “Instead of seeing a re-run of last quarter’s slightly concerning results, this time we are buoyed to see a more considered reverse state of affairs,” said Bainsfair. “Those companies that can are heeding the evidence that in general, investing more in main media will help to steady them through the uncertain times and help to ensure the longer-term health and profitability of their brands. They are recognizing that marketing spend is an investment not a cost.”

For Richard Kelly, Mindshare UK’s chief solutions officer, this finding was an encouraging sign of positive brand attitudes in the face of economic headwinds.

“This report suggests that advertisers and agencies have adapted their playbooks to navigate a persistent economic downturn, in contrast to the more typical recessions followed by recovery cycles we’ve witnessed in the past,” he tells The Drum. “With the economic outlook remaining challenging for the foreseeable future, it’s encouraging to see brands prioritizing long-term growth over shorter-term cost savings. As we approach the run-up to Christmas, it becomes more crucial than ever for brands to craft messages that are empathetic and resonate with the public to drive positive growth during what could be a challenging winter for many.”

According to Joe Hayes, S&P Global Market Intelligence’s principal economist, such a shift was advisable for companies going into a recession, despite the pressure on budgets. “We saw last quarter that firms had become concerned by the persistence of the cost-of-living crisis, which drove a record rise in sales promotions spending.

“In the latest quarter, however, firms have gone back to brand-building, with anecdotal evidence suggesting that this move has been made both defensively and offensively. With demand conditions coming under pressure, companies will have to position themselves strongly to stand out from their competitors,” he added.

Additional reporting by Hannah Bowler.

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