Bellwether reaction: The rise of real-world connections

New figures from this week’s IPA Bellwether Report reveal that total UK marketing budgets have been revised up at the highest rate for a decade, with direct marketing and events the principal drivers of growth.

While the report draws its own conclusions, Decision Marketing quizzes industry chiefs for their take on what it all means for the industry and beyond.

First up is Joint CEO and founder Richard Exon who says the report’s general optimism, cut with a dash of caution, is “instructive”.

He adds: “As we enter into an election year there will be mixed messages from both sides about the health of today’s economy and the promise of the future economy. Marketers are more expert than many at cutting through fake news and focusing on perennial truths, like the disproportionate returns brands recoup when they consistently invest in advertising in uncertain times. So it’s times like these where creative agencies can create outstanding value for our clients and keep them ahead of their competition.”

Exxon cites the figures for video advertising, up from +0.9% net growth to +6.6%,  but maintains that while video has become an essential tool for modern advertising campaigns – targeting specific audiences, providing valuable insights for marketers in a cost-effective way – he firmly believes established channels such as TV and out of home are still critical ingredients in brand growth. Especially when seamlessly combined with performance marketing in social and digital.

For Imagination group CEO Patrick Reid the report proves that events and in-person experiences are yet again showing resilience in a volatile market.

He explains: “Standing out as the only category scoring a higher net balance than other online marketing, the Bellwether findings underscore a deepened understanding of the power of experiences to deliver against ROI. With a +15.9% surge, the future for the sector is looking very promising. But marketers need to remain agile, keeping a close eye on evolving consumer behaviours and technological changes.”

Meanwhile, Tribal Worldwide head of strategic planning Mark Geden highlights the resurgence of direct marketing. He explains: “Thanks to more interactive content and the development of technologies like chatbots and AI, direct marketing is finally evolving into a more personalised way to engage with audiences and shoppers – paving the way for marketers to create better, more memorable experiences for customers.

“The report’s findings are significant, as they reflect the industry’s adjustment to a more long-term approach, with a shift back to brand building and an uptick in direct marketing spend.

“Despite the potential challenges, the report points to brands investing heavily in securing long-term success. The resilience and optimism among marketing executives for the 2024 budget plans are evident, despite the longtail of the cost-of-living crisis and ongoing economic uncertainties.”

OMG UK chief market analyst Bhavin Balvantrai agrees, pointing out the crucial role that confidence plays in unlocking investment when the short-term picture is clouded by uncertainty.

He says: “Falling inflation levels and prospects of lower interest rates, will lead to a more confident consumer, boosting sectors like autos and the property market that rely on credit for sales. A more confident consumer, combined with a more navigable macro environment, gives businesses confidence to invest in areas such as marketing. The rhetoric throughout the year should shift from crisis to growth.

However, Balvantrai warns that confidence is fragile. “Supply chain pressures, one of the headwinds that we track at OMG, appeared to have subsided. However, recent Houthi attacks in the Red Sea show how quickly the environment can change. 2024 is quite rightly regarded as the year of the election, with roughly half of the world’s population voting for new leaders. This will naturally lead to more uncertainty, particularly towards the end of the year when the US and expected UK general election dates fall.

“Preliminary budget setting for 2024 is strong, and macroeconomic conditions are improving, but the year remains subject to risks. Being informed, and having strategies in place to mitigate these risks and capitalise on opportunities, will be key to success.”

For Analytic Partners director Justine O’Neill, meanwhile, cautious optimism is the best stance. She explains: “If increased budgets hold, CMOs will have a lot of power on their hands to drive business impact. However, they must still evaluate investments carefully and holistically based on each brand’s KPIs and not be misled by siloed metrics or performance measures.

“The report shows us that sales promotions budgets were revised higher in the last quarter of 2023, but there needs to be a balanced approach to short-term gains and long-term growth as we have seen with M&S and its great results from a decrease in promotions. Brands who take price in combination with media support have 30% less negative impact to their business compared to those who don’t, according to our ROI Genome research.

“In 2024, we expect to see more CMOs being able to astutely defend their budgets and build strong marketing strategies by proving the value of marketing to achieve their goals. One pointer to be aware of is that spending the increased budgets on creating multiple new campaigns, or overhauling their brand platform for no good reason, might further water down efficiency and effectiveness.

“A positive current example is Cadbury who, as they celebrate 200 years, have reignited creative from their long standing ‘Glass and a half in everyone’ brand platform while also using a multichannel approach in Q4 of 2023 to deliver £230m in revenue.”