IPA Bellwether report signals growth of marketing and events despite economic headwinds
Whilst the UK economy is expected to be entering a looming recession, the latest IPA Bellwether Report signals some positive growth for the marketing and events industries.
The report finds that despite the ongoing crisis, firms have continued to invest in their marketing budgets in order to protect their brand against the impending downturn. In fact, one-fifth of respondents upwardly revised their budgets, and investment in events increased from 4.5% to 5.7%.
The overall story throughout the report is positive for many in the marketing industry. In previous recessions, marketers have cut budgets and have suffered the consequences. However, the findings suggest that brands have learned from mistakes made in the 2008 recession and are now set to continue this growth throughout 2023/2024.
We have spoken with a variety of experts across the events, marketing and advertising industry to get their thoughts on the findings of the report.
Patrick Reid, Group CEO of Imagination
“Last year we saw a return to live experiences like never before, with global sporting events like the winter World Cup and Women’s Euros providing huge opportunities for brands to connect with fans and drive spending.
“So, it’s no surprise to see that events have continued to be the top performing category in marketing budgets in Q4, and are expected to continue this trajectory in 2023 and beyond.
“It is promising to see that even during times of financial uncertainty, brands turn to experiences as a key marketing activity, which reflects what we’re seeing across our own client portfolio.
“Brands today understand the value of engaging with customers on a deeper, more authentic level as a means to drive brand growth. We look forward to seeing this category continue to grow, and the innovations that will inevitably follow.”
Richard Robinson, Director at Econsultancy
“The latest IPA Bellwether presents a promising outlook as marketing budgets are expected to offer strong growth in the 2023/2024 financial year.
“However, with the potential for a recession still looming, it’s increasingly important for marketers to consider the need to include training within their budgets, as the report demonstrates shortages of suitably-skilled staff are expected to continue to hold back growth in 2023. Bridging the skills gap and ensuring teams achieve business growth will be a key focus in the coming year, with marketing leaders stepping forward to provide their existing talent with the knowledge, skills and mindset to grow.
“In parallel, it’s reassuring to see the resurgence of event marketing, particularly after it took such a big hit during the pandemic. Alongside main media marketing seeing the strongest growth, there’s much in the latest Bellwether report to provide a hopeful light in the midst of economic uncertainty.”
Michael Richards, Managing Director of alan.
“Whilst uncertainty remains, brands are not yet panicking and throwing the baby away with the bathwater. As marketers, it’s hopeful to finally see an understanding around the value of marketing during these turbulent times.
“However, the Q4 report does highlight the further decrease in market research budgets, continuing the downward trend in 2022.
“As we head into the recession, conducting market research into audience behaviours will be vital to understanding how best to target them with much-needed visceral marketing. Communicating efficiently with business decision-makers is key to ensuring success during the recession. Brands are listening and continuing their investment in marketing, so why not invest efficiently?
“The economic distress ahead of us will likely make the industry nervous. But the outlook for marketing budgets in 2023/24 is looking strong and the brands that continue to invest through the disruption will come out on top.”
Alex Charkham, Chief Strategy Officer, Fuse
“The latest IPA Bellwether report is a signal that businesses are really valuing the role of marketing as they navigate uncertain times. And with events being the highest-performing Bellwether category in Q4 (net balance of +5.7%, vs. +4.5% in Q3), organisations are clearly investing more of their marketing spend on, or around, live, in-person experiences as a means of re-engaging with consumers after Covid.
“Although there is no specific analysis on sport and entertainment partnerships within the report, following a busy and highly successful golden quarter of sport, we can expect to see more marketers move their budgets into this area in 2023.
“Sports’ ability to command mass audiences– as seen throughout the World Cup with a record-breaking total viewership of 5.4 billion – means it provides an attractive offering for brands, allowing them to convey their message and product to a wider audience, encompassing sponsorship, campaigns, advertising, and events.”
Justine O’Neill, Senior Director, Analytic Partners
“We’ve seen how important continued ad spend is during an economic crisis and that brands that continue investment will come out stronger on the other side. Our own report, ‘The Rules of Recession Proofing’, proved that marketers who cut spend risk losing 15% of their revenue during economic downtimes. In this latest Bellwether report, it’s promising to see that companies are already reporting an increase in spend for 2023/24, despite the recession still ahead of us.
“The trend towards online media is still unbroken which makes sense in the aftermath of the pandemic and changed consumer behaviour. Although its sales impact growth has slowed down, according to our own research. Except for video advertising, ‘other online advertising’ was the only category to record greater marketing expenditure in Q4. This includes emerging media trends such as retail media, which we see as one of the key media to look into for 2023 – there is a lot of potential that is still untapped with currently high ROIs.
“There will also be more opportunities for online retail in general, as ‘falling shipping costs’ were noted as one of the key opportunities for the coming 12 months by retailers. But beware, not all media trends will work for everyone. Brand should always take a ‘test and learn’ approach whenever looking to implement change, particularly during times of uncertainty.”
Matt White, VP EMEA at Quantcast
“It’s promising that once again advertising spend has increased over the quarter, despite the current economic landscape of the UK. A driving force behind this will no doubt have been the travel industry. With pandemic restrictions here completely removed, people have been close to desperate to get away following two years without being able to enjoy the sun. Businesses in the sector have therefore continued to invest heavily in ad spend to ensure they’re enjoying a sizable slice of the pie.
“Businesses have also built up a level of robustness following 2.5 years of permacrisis and very few companies will now be going into this year assuming there won’t be obstacles to overcome. The past two years have no doubt made organisations more resilient and understand that they can’t afford to completely switch off advertising spend, as it’s increasingly difficult to return to peak levels from a standing start if competitors have been active throughout testing times.
“It’s difficult to say with any certainty what the future of the industry will hold, especially in the current economic landscape, but as the recession takes hold, it’s likely ad budgets will be impacted.
“However, one area that will continue to grow throughout the UK is the CTV market. This year will see increased monetisation of inventory and ad space as CTV leaders such as Netflix and Disney+ continue to expand and new players enter the market. This will increase the availability of direct-to-consumer advertising, which in turn opens up a whole new marketplace which advertisers can engage with while there’s a low barrier to entry.
“With younger generations tuning out of linear TV in droves, CTV will become a must-have for marketers. Those who play the waiting game will miss the opportunity to connect with audiences before their competitors do.”