Ask Not For Whom The Bellwether Tolls

When it comes to journalistic cliché you can’t beat a curate’s egg analogy and the latest IPA Bellwether Report provides just that.

The study of 300 ad companies revealed that more had raised their marketing spend in the second quarter of 2022, but that prospects for the rest of this year, and next, were less favourable.

Indeed, more companies were pessimistic about their own company’s prospects than were optimistic, and that this would have a knock-on effect on planned ad spend. The report indicated that the risk of a recession has intensified and, as such, the Bellwether has cut its adspend growth forecast for this year to 1.6 per cent (from 3.5 per cent previously).

While the Bellwether prospects change periodically (as bellwethers should), what implications does this have for agencies and marketers? We asked some to find out.

Larissa Vince, chief executive, TBWA\London

I have had many conversations over the last few months with clients about the impact of what looks set to be an even more challenging business environment than Covid, so the survey results are pretty much as expected. In that sense, it doesn’t change much for 2023.

We all know that spending through a recession yields long-term results for brands. Taking a long view, rather than focusing on the short term, is what we would all advocate doing.

But we also know that in tough times, the best agencies show empathy to clients’ challenges, and double down even more on demonstrating the value of great creative partnerships. We do as we advise, and focus on the long term, rather than the short – and that’s what I would expect for 2023.

Sam Drake, managing partner, Goodstuff

Uncertainty is never a good thing. We are always trying to strike the balance between short-term fiscal responsibility and investing time and energy in long-term innovation. The report certainly does place additional focus on the former. Having said that, periods of economic growth and recession are cyclical and we all know this won’t last forever. We are believers that those businesses who continue to innovate and evolve through the tough times, are the ones who come out of them stronger. As an agency, we have some exciting plans afoot to evolve our offering while ensuring we are prioritising the interests of our clients and Goodstuffers right now.

Benazir Barlet-Batada, marketing director, Cadbury UK

The report shows that marketing professionals are navigating a challenging and uncertain commercial environment. In this context, it’s important marketers show leadership, maintain resolve, and focus on their long-term strategies.

While we all need to adapt, short-term cutbacks tend not to reap long-term results, and brand owners should continue to invest to ensure success and cut-through with their loyal audiences.

With Cadbury, we have a brand that is woven into the fabric of the nation. Almost 200 years old, it has become a mainstay of British life – and we feel a responsibility to continue that cultural relevance today. In my view, marketing professionals should retain their belief in the power of ideas, and continue to think big and be bold.

Peter Reid, Global Chief Executive, MSQ

Our experience is that we’re finding client plans are remaining firm across almost all of our businesses, with pleasingly robust levels of new-business opportunities coming through. Indeed, I’d say that the general sense from a lot of our clients – particularly those in sectors such as FMCG – is that in an inflationary environment like we’re experiencing (especially if it’s a relatively short-term inflationary environment), they will need to continue to invest in their brands to justify things like price premiums. Now is the time to invest, not cut budgets – and clients seem to be walking the walk here, not just talking the talk.

What’s perhaps most interesting is that while budgets are remaining robust, we’re seeing a marked shift in where clients are spending. They’re markedly moving budgets away from broadcast channels and into conversion channels. There’s growing opportunities in earned media and social-first briefs – and on the new-business front, there’s a big increase in dynamic content and digital transformation briefs, and those focusing on using digital content channels to build memory structures and brands. I think that transition would have happened anyway, but it certainly seems to have accelerated over the past six months.

Amy Lawrence, digital director, MediaCom, and chair of the IPA Digital Marketing Group

After several quarters of positive signs and continual growth, it is disappointing to see main media advertising budgets stagnate in the Q2 report. However, with so much economic uncertainty, this is certainly not surprising. Continuing the shift seen in Q1, “other online” remains ahead of “video” as the main growth channel, although at +4.4 and +0.8, respectively, this does little to offset big cuts elsewhere. The next few months are crucial for marketers to get a clearer picture of the impact that the cost of living crisis will have on consumers – however, as we have seen many times before, those who significantly cut brand spend will be hit the hardest in the longer term.