With the Q3 2014 IPA Bellwether report finding that marketing bugets have reached the third highest level since the creaton of the survey, with a predicted adspend growth of seven per cent in 2014, The Drum caught up with industry experts to see what this will mean.
Agencies such as DigitasLBi, MEC, Arena, Carat, Zenith, iProspect and Vizuem take a look at the results, which saw internet (14.5 per cent) and main media advertising (9.2 per cent) budgets see the highest increases.
Ed Beard, head of creative strategy, DigitasLBi
The overall result clearly shows continued optimism as we bounce (hopefully) out of the recession. But the details paint an interesting picture. While digital carries on surging ahead its growth is followed closely by more traditional advertising, suggesting there's no huge appetite for a straightforward shift of marketing dollars between the two.
The strong rise in events could well be driven by the fact that the industry is learning how to maximise the effectiveness of events by plugging them into social channels. And the mass enthusiasm for big data would appear to be rapidly eroding marketers’ historic thirst for market research.
Working out how to truly measure effectiveness and channel attribution will, over the course of the next year, become more important than ever.
Ian Bowden, head of SEO, Arena
The continued transition of spend is good news for those in digital. However the overall ad spend growth is on the back of an optimistic outlook for the UK economy. If inflation remains low, the increase in interest rates is unlikely to come early in 2015. But concerns about economic recovery have manifested themselves this week meaning that the growth documented in this Q3 2014 report is likely to slow going forward.
The findings are consistent with what we have seen in our channel. Historically SEO has been treated as a direct response channel only, and investment in SEO has been primarily made because it is a very cost efficient source of acquisition for brands. That is now changing. We’re seeing clients increase their investment in SEO, but importantly now for brand building campaigns. This same trend is occurring across other digital channels as clients increasingly diversify direct response and brand building activity.
Matthew Landeman, client service director, Carat
With net balance marketing revisions up 12.6 per cent, it’s good to see investment is continuing to improve.
Whilst there are some potential concerns around the effect of interest rate rises, and a subsequent cool off of demand next year, the fact is that the underlying trend is one of belief in marketing as a force for UK growth at a time when consumer and business confidence is getting better.
The maintained balance improvement in internet spend comes from continued growth across all major digital touchpoints and reflects increasing consumer convergence. Specifically, we have observed notable gains in mobile, social and video spend over the last 12 months, which will be driving this growth disproportionately. On mobile this growth has been fuelled by greater smartphone and tablet penetration and marketers, media owners and their agencies really making the most of new opportunities opening up in terms of data, targeting, content and technology.
James Hankins, strategy director, Vizeum
The latest Bellwether comes the day after the FTSE experienced its biggest drop in more than 16 months and shortly after several surveys that suggest consumer confidence has stalled to give us an interesting vantage point from which to view the outputs in the report. These factors, coupled with continued evidence that disposable and living incomes are still under pressure (and being subsidised by savings and credit), paints a very different picture from the positive one that could be taken from the report.
Taking into account the likely dampening effect of the upcoming election and the predicted interest rate increase, brands and businesses should be wary of taking too aggressive a budgetary stance as we move into 2015. If they do plan to spend more then it may be wise to push weight of spend into the second half of next year when the business and consumer landscape should be a bit clearer.
Justin Taylor, managing director of digital, MEC
It is fitting that in a week awash with digital events, from the inaugural Digital Upfronts to IAB Engage, we see sustained double figure growth in digital marketing spend.
As we unpack the figures we see that growth is coming from the continued evolution of video consumption, the intensification and persuasiveness of mobile as our primary access device, the expansion and sophistication of content distribution all underpinned with the ability to reach targeted and relevant audiences at a scale never seen before.
Simply put there has never been a more exciting time for media or marketing professionals to use the gambit of media opportunities available to build, reach, connect and engage with audiences.
Today’s media has moved beyond myopic channel planning into integrated and connected signal planning that puts the consumer need state at its heart.
I would challenge the forthcoming report for separating ‘internet’ and ‘main media advertising’. This already seems outdated and not connected with the reality of modern media delivery.”
Tom Cijffers, managing director, Zenith UK
The continued strength of the Bellwether report is fantastic news for the UK economy and the advertising industry. Recent reports (FT, 5/10/14) have shown that large companies in the UK are sitting on £53bn of cash and advertising, as a business investment which delivers relatively quick returns (versus R&D or building new factories, for example), is a leading indicator of business’s willingness to invest in the UK economy. This, coupled with the return of real wage growth which is putting more money in consumers’ pockets, suggests that the advertising industry can expect a positive 2015.
The continued growth in digital advertising tracked by the Bellwether report reflects ZenithOptimedia’s own forecast that investment in digital media will grow by 16.8 per cent in 2015, driven primarily by a 44 per cent growth in mobile investment. Mobile search volumes continue to grow, social media continues its migration to mobile platforms and single stack solutions such as Microsoft, Facebook and Google allow seamless targeting across desktop and mobile devices.
Chris Whitelaw, chief executive, iProspect UK
It is clear from this latest report that the industry is continuing to see consistent growth. This reflects the recent upward shift in the overall UK economy, despite global uncertainties affecting the broader business environment. We are not yet on the solid ground, though. Brands and businesses need to continue to invest more into marketing now than ever before to meet growth targets and sustain share of voice.
The British digital economy continues to be a beacon of growth. Internet spend is growing faster than main media advertising reflecting the shifting behavioural patterns amongst everyday consumers. With more advanced technologies and greater accuracy in campaign measurement brands can clearly understand the benefits that come from their investment in these channels. As a result, digital is starting to stand apart from traditional advertising as it becomes seen as the valuable driver of measurable performance.
Pietro Leone, chief executive EMEA, Geometry Global
It is encouraging to see the return of favourable market conditions in which ambitious marketing activity can thrive. Companies are feeling more confident and, with a growing range of channels on offer, less risk averse when it comes to investing money in new platforms.
It is no surprise that digital continues to gain momentum as brand owners look for activity that creates meaningful engagement with audiences. We have seen from our own Connected Shopper study how a fully integrated online approach can help to drive sales.
But although it’s good news for the industry, it’s not all plain sailing. With the latest news of the UK inflation rate being at a five-year low there is a risk that investment won’t equal sales. In order to overcome this, brands need to focus on maximising their investment and driving conversion.
This is where quantifiable activation at point of sale - using precise methods to deliver creative via the right channels at exactly the right moment – is beneficial.