This morning's Bellwether report found that almost 30 per cent of companies registered an increase in budgets during the first quarter of 2014.
The Drum caught up with a digital performance agency, a media agency and a marketing services consultancy to discover what the results could mean for the future.
Jon Pile, client director, Carat
The future is bright according to Bellwether’s latest report on the marketing sector, and coupled with the strong growth in wages, there seems many reasons to be confident in economic recovery. Internet growth never really slowed down over the recession, whereas total marketing spend plummeted and fluctuated around zero growth for several years. Therefore, the sharp increase is more evident. During the recession marketers became more focused on return on marketing investment and new evaluation tools combined with better use of data are giving marketers and their financial directors greater confidence to invest in traditional media.
Kerry Glazer, CEO, AAR
We are gradually emerging from five years of austerity, and consumer confidence and spending power is beginning to return. During a recession, marketing is one of the first budget lines to be cut but when the economy improves, it is one of the first to come back. Marketers need to start thinking about the right changes to make in response to the increase in consumer confidence. The challenge of obtaining approval for more budget from their board still remains and it’s important to note that while we are seeing pockets of confidence, this is not a UK-wide scenario. Though the economic picture is brightening, the challenges that clients and agencies continue to face means that both parties will have to work together in the most effective way possible. Clients will need to be absolutely clear about their briefs while agencies must ensure they are “pitch perfect” if they are to win client approval and capitalise on new opportunities.
James Hankins, head of integrated planning, Vizeum
With perfect synchronicity this quarter’s IPA Bellwether report is released on the same day that we’ve found out that wages growth has risen about price inflation (in real terms) for the first time since Spring 2010 (although hopefully this time there will be a more sustained period of growth). The substantial growth levels in marketing budgets certainly suggest that marketers believe consumers are in the right mindset to begin buying again and consumer confidence data backs this up. The thing to watch for everyone is that wages still need to consistently grow above price inflation to overcome the recent trends which put households 10% worse off than before the recession. In reality this provides people with the key insight into the economy – it’s all about confidence. It may not matter that households have very little disposable income, it’s that they feel more positive and as behavioural economists have repeatedly shown, being in a good mood makes you more receptive to messaging.
Chris Whitelaw, CEO, iProspect UK
Marketing budgets are being driven by a stronger economy and improving confidence as evidenced in the latest IPA Bellwether Report. There is a growing sense amongst brands that the continued trend of economic recovery will require a continued up-weight in budgets or risk losing market share. Those businesses that have weathered the downturn of the last few years relatively well are readying themselves to fully turn the taps of growth on. This recovery will see digital as the battle-ground for brands to win the hearts, minds and wallet of consumers.
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