IPA Bellwether: marketers see biggest boost to budgets in 4 years

Pent-up consumer demand, the vaccination roll-out and lockdown easing have been credited for budgets increasing at their fastest pace since Q2 2017.

Progress is forecasted to continue into 2022, with ad spend set to grow by 6.2% next year. The report does, however, expect ad spend to normalize by 2023 and 2024 (2.4% and 1.7% respectively).

Despite strong growth, the sector fell short of the forecasted +17.4%, with some respondents reporting “lingering uncertainties” around rising covid cases over the winter period and ongoing supply chain issues.

IPA director general Paul Bainsfair said: “There were widespread concerns among Bellwether panelists that supply shortages and issues with transport could hinder their business operations and also impact their sales performances, as many firms pass on these higher costs to their own selling prices.”

He added: “Having said this, we welcome the figures that reveal advertisers are making the most of the overall economic uptick and are seizing the opportunity to invest in their brands.”

‘Big-ticket’ marketing saw the highest growth in Q3, +8.6% from +1.3% in Q2, followed by direct marketing, which posted +5.6% from +0.7%. There was marginal growth for market research (+0.7%, from -9.6%), while events and PR continued to err on the side of caution posting budget reductions of -3.2%, from -24.7%, and -1.8% from +1.8% respectively.

Although cautious of upcoming challenges, 37.5% of companies said they were more optimistic about their financial prospects a level of optimism not seen since Q1 of 2015.

Breakdown of budget revisions

• Video was the top performer in the main media category with a net balance of +12.6% from 4.2%, video moved ahead of online which had a net balance of +10.6% just shy of Q2’s +11%. Audio and publishing had more modest revisions at +6% and +5.2% respectively.

• Out of home was the only main media category to record a budget cut, with the 11.9% of firms that reduced OOH spend outweighing the 9.9% that revised upwards, resulting in a net balance of -2.0%.

• Direct marketing had the strongest upward budget revision for 11 years. Respondents expect direct marketing to reach a net balance of +6.8% in the 2021/2022 financial year.

What the industry says

• John Wittesaele, Xaxis chief executive officer for EMEA, says the growth of video advertising has been “remarkable“. “Brands now have greater control than ever to ensure contextual relevance, format suitability and adaption of the message to the device or environment it is viewed. If video capabilities continue to expand, and integration across formats, channels and platforms keeps pace with consumer habits, we can expect it to be a star performer in Q4 2021 and throughout 2022.“

• Paul Wright, managing director for UK, France, Middle East and Turkey at AppsFlyer, says: “The rise in direct marketing aligns with what we’ve seen specifically in the mobile space where brands are prioritizing their owned channels, such as email and social media, to reach consumers and build brand affinity. Moving into a privacy-first era with reduced access to user-level data, utilizing these channels and establishing trust will be crucial.”

• Rik Moore, head of insight, strategy and planning at The Kite Factory, says the report is “extremely positive” and the speed of pandemic bounce-back is “hugely encouraging”. He says the recovery will be “driven by those advertisers who have heeded evidence from previous episodes of large-scale disruption that brands that are able to spend through and then out of the pandemic can achieve a disproportionate share of voice in the short term while also driving additional brand benefits in the longer term”.

• Charlie Johnson, international vice-president at Digital Element, says “the next few months will be revealing as we watch the continuing disruption of recent years play out“. She advises marketers that “access to reliable data will be vital to understanding how this turbulence is impacting shopping behaviors, both online and offline; meanwhile monitoring regional stock levels to protect campaign success and customer experience this Christmas will be similarly important“.