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Retailers failing at simple eCommerce best practice
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Online retailers could be making more in revenues if they applied simple measures, such as appropriate product imagery.

That’s according to research carried out on 1,213 UK adults by agency MarketingSignals, which found a staggering 61 percent of those polled were put off purchasing from a website by insufficient or poor product imagery, followed by 57 percent that found product descriptions inadequate.

The survey also found that more than half (52 percent) of these businesses are failing potential customers with their lack of customer service, while 47 percent have overly intrusive discount pop ups on the home page, which can potentially detract users from making a purchase.

43 percent of those polled were put off by websites that has an over complicated checkout process, while 41 percent would be deterred by an e-commerce business which has little or no social media presence.

A third (34 percent) of those questioned said that a lack of delivery options would deter them from from making an online purchase, whilst a website that wasn’t optimised for mobile devices would put off 27 percent of respondents.

16 percent said they’d be put off from making a purchase if they couldn’t see company information or an ‘about us’ page. Completing the top ten reasons which deter users from making a purchase was customers who prefer to use alternative payment methods, with over one in ten (11 percent) saying that they’d seek to make their purchase elsewhere if a website did not accept the PayPal or Apple Pay.

Gareth Hoyle, managing director at marketingsignals.com, said: “It’s clear from the research that many potential customers are being put off from making a purchase from websites they are not familiar with, which makes it so much more important for e-commerce businesses to make the checkout process as simple as possible in order for them to complete their transaction smoothly.

“In this social media age, it’s perhaps unsurprising that 41 percent of Brits would be put off from making a purchase from a website that is unfamiliar to them and doesn’t have a visible social media presence.

“Internet savvy consumers are always keen to spot a bargain, though can be put off by over complicated or seemingly untrustworthy websites when attempting to make a purchase, instead opting to buy from a site they already know and trust. So what this research demonstrates is that it’s clear that there are simple steps e-commerce businesses can take in order to improve conversion rates from first time visitors to their site.”

The top ten reasons that deter customers from making an e-commerce purchase:

  1. Insufficient or poor quality product imagery – 61 percent
  2. Inadequate product descriptions – 57 percent
  3. Lack of customer service – 52 percent
  4. Distracting/Intrusive pop ups – 47 percent
  5. Over complicated check-out process – 43 percent
  6. Little or no social media presence – 41 percent
  7. Lack of delivery options – 34 percent
  8. Desktop-only site design – 27 percent
  9. Insufficient or lack of company information – 16 percent
  10. Not accepting alternative payment methods including PayPal and Apple Pay – 11 percent

Image by StockSnap from Pixabay

Retailers urged to embrace digital personalisation
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Retails have been urged to extend personalisation at every digital touchpoint and to every individual using AI, in light of more dire warnings on the state of the High Street.

The British Retail Consortium and KPMG have noted the lowest sales figures since 1995 in May, which in a year plagued with closures and CVAs raises the alarm for further decline in the UK high street in the coming months.

According to Raj Badarinath, VP Ecosystems at RichRelevance, brands and retailers are desperately looking for a solution, but stubbornly ignoring the most critical factor: what customers want.

Badarinath asserts that instead of exploring their customers as individuals (not rough marketing-made segments) they keep holding on to outdated personalisation tactics that are clearly not good enough.

“It is disappointing to see retail sales falling year on year in the UK. It’s a tricky time for UK retailers – as they battle on multiple fronts: monopolies like Amazon, ankle biters such as DVNBs (Digitally Native Vertical Brands) and more,” said Badarinath.

“UK consumers today are short on time and inundated with the problem of choice – too much content, product, offers and more. Retailers should reduce decision fatigue by extending personalization at every digital touchpoint and to every individual using AI, which provides the technical ability to do so for the first time. Retailers realize that the UK consumer is fickle and easily wooed, so techniques like hyper-personalization ensure a seamless, memorable customer experience, to increase repeat sales and improve overall lifetime value.”

UK ad spend to hit £21.8 billion in 2019, but growth slows
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Advertising is on the up, with UK spend expected to increase to £21.8 billion, up from £20.5 billion in 2018.

That’s according to the latest forecasts by media investment group, GroupM, which predict 6.1 percent growth for 2019, down from 7.8 percent in 2018, with this year aided by decent underlying growth, admittedly with a slight decline.

Brexit still occupies management bandwidth, which in turn affects ad-budget setting with the potential to lead to reductions.

Digital advertising continues to grow at around 11 percent for 2019, accounting for more than 60 percent of total UK advertising, of which over half is search.

Digital media ‘pure plays’ represent the largest group of ad sellers, with Facebook and Google accounting for around three-quarters of the figure on a gross basis.

After hitting £4.5billion, television accounts for around 20 percent of media investment and remains a stable medium in terms of advertising, with spending left unchanged in 2018 over 2017, with levels set to remain for a 24 month period.

Radio also appears set to hold on to its revenue base this year, followed by closer to +2 percent growth next year, along with Out-of-Home (OOH), digital formats which are becoming increasingly important, accounting for half of spending in OOH during 2018, with further share gains still to come especially as more automation takes root, including the emergence of performance-based targeting and data-driven trading. For now, GroupM forecasts growth exceeding +3 percent in each of 2019 and 2020.

The losers in the advertising game continue to be print, with newspapers and magazines now accounting for less than 10 percent of media investment combined in 2019, down from more than 50 percent in a 15-year period.

Image by Falkenpost from Pixabay

SME GDPR compliance only ‘skin-deep’
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72% of UK SMEs report being ‘very aware’ of GDPR and its requirements, but 60% say that the recent changes to data protection have had a ‘slight’ or ‘no’ impact on their business, while 8% do not know.

The figures, from a survey commissioned by Shred-it, have revealed a positive understanding and engagement with the principles of GDPR among SMEs on its first anniversary, but also highlight a possible cosmetic understanding and key areas of concern around the more complex aspects of full compliance.

The independent survey of 1439 SMEs comprised a series of unprompted questions and covered a range of businesses in specific market sectors across the United Kingdom with 85% having 10 to 49 employees.

When asked about GDPR readiness nine in ten rated themselves as a ‘4’ or ‘5’ out of 5; the main actions taken were reviewing policies (45%) and emailing customers for consent (35%). These are considered to be the lighter ‘front end’ aspects of GDPR compliance according to Shred-it’s experts.

The survey data showed that one third (32%) of SMEs reported that GDPR has had a ‘great’ or ‘considerable’ impact on their business. When those businesses that had experienced challenges with GDPR compliance were probed further, they cited data breaches and disclosure requirements as the main challenges, with healthcare (27%) and real estate (25%) the main industries affected with those specific areas. Small proportions also reported issues with subject access requests, again with healthcare (28%) and real estate (15%) being the main industries affected.

Ian Osborne, Vice President UK & Ireland for Shred-it, said: “On the surface it is good news. It is clear that many feel they are already compliant with GDPR having reviewed areas such as ‘consent’ activities and publishing a privacy notice. These typically deal with the ‘front end’ aspects of GDPR. However, while many say they are ready, there is a real question mark over the extent to which the majority of SMEs are prepared to respond to a data breach or how to react to a subject access request, for example. Our survey suggests that there is still a need for a large education exercise to show SMEs what is really involved in GDPR compliance at depth.”

Of the 10% that said they were ‘not quite’ or ‘not at all’ ready, who rated themselves as a ‘1’ to ‘3’ out of 5, 42% (54 businesses) said they have not been dealing with it; when asked what was holding them back, their unprompted reasons were that data protection authorities were ‘only interested in bigger companies’, it was ‘not applicable to us’, it was ‘too complicated’, and they were ‘too busy’. Of the 10%, two in five would only trust someone in-house to help them comply with GDPR – only one in ten would consider external support and only 4% would trust the data protection authority for assistance. The SMEs that would consider external support were unsure what services they needed and when they would intend to look for support.

In the twelve months between 25th May 2018 and 2019 the Information Commissioner’s Office (ICO), the UK’s independent authority set up to uphold information rights in the public interest, has taken 59 enforcement actions.

Osborne added: “Our survey seems to show two clear pictures emerging. One is where the majority of SMEs are genuinely engaged with the process of compliance; within that group there are many who believe they are already compliant but may have missed some key more complex parts of the GDPR. It is the minority in that group who have recognised its greater challenges and are wrestling with its more complex areas. The other is one where some SMEs recognise they are not ready, seem unwilling to address the issue of GDPR compliance and are reluctant to seek support in any form to help them. When the relevant authority’s fines become more common headlines across the UK, we expect that views may change about what compliance really means.”

Retailers ‘neglecting Twitter and Facebook for customer service’
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Retailers are neglecting social media when it comes to customer service, and are not listening to consumers to drive customer experience improvements.

That’s according to the 2019 Eptica Digital Trust Study, which found that while retailers successfully answered 59% of routine queries asked via web self service, chat, email, Facebook and Twitter, there were wide variations in performance between channels.

Retailers provided answers to 83% of queries on their websites but only responded correctly to 38% of tweets and 50% of Facebook messages. Performance had worsened on many channels since 2017 – then retailers answered 73% of emails.

By 2019 this had dropped to 68%, despite the continued popularity of the channel with consumers, who use it for over a quarter of their interactions with brands.

As part of the study, 20 fashion and food & drink retailers were evaluated on their digital customer experience, alongside brands from other sectors, by testing their accuracy and speed at answering relevant, routine queries, repeating research conducted since 2012. Questions included asking about ethical sourcing policies (fashion) and allergy labelling (food and drink).

Additionally, 1,000 consumers were asked for their views on customer experience.

Fashion (answering 60% of all queries) and food and drink (59%) were the top sectors surveyed but still failed to respond to 4 in 10 of all routine queries.

The research also demonstrated a direct link between trust, listening and loyalty. 89% of consumers surveyed said they either will stop buying from brands that they don’t trust or will spend less. Building trust begins with delivering on basic promises – 59% ranked giving satisfactory, consistent answers as a top three factor in creating trustworthiness, while 63% rated making processes easy and seamless as key. Just 8% of consumers felt that brands were listening to them all of the time, with 74% believing brands pay attention to their views half the time or less.

“The move to digital has transformed the retail landscape,” said Olivier Njamfa, CEO and Co-Founder, Eptica. “Greater choice means consumers are becoming more demanding and are actively seeking out brands that they can trust and who listen to them. While retail brands have made some improvements since 2017, they have slipped back in others, damaging trust and ultimately customer loyalty and revenues. If they want to succeed they need to listen to customers and use their insight. Only those who do this will thrive and stay ahead of the competition.”

Retail Accuracy 2019
versus 2017		 Average speed 2019
versus 2017
Web 83% vs 70% n/a
Email 68% vs 73% 10hr 19m vs 24hr 12m
Facebook 50% vs 28% 43m 24s vs 3hr 34m
Twitter 38% vs 50% 1hr 56m vs 1hr 43m
Chat 35% vs 25% 8m 43s 4m 24s
Total 59% vs 55%

Speed of response also varied widely between channels – and even within sectors and brands. One fashion retailer answered a tweet in 17 minutes, yet another took 50 hours to reply. A food and drink retailer responded on Facebook within one minute but needed nearly 23 hours to provide an answer on email. Overall response times on chat doubled from 4 minutes back in 2017 to 8 minutes this year. Facebook had the fastest average speed of response, at 43 minutes, 24 seconds – over twice as fast as Twitter (1 hour 56 minutes) and nearly 15 times faster than email (10 hours 19 minutes). This is despite exactly the same questions being asked across these channels.

The study evaluated 50 UK brands, split equally between the fashion, food and drink, travel, insurance and banking sectors. Brands were rated on their ability to answer five routine questions via their websites, as well as their speed, accuracy and consistency when responding to email, Twitter, Facebook and chat. Additionally, 1,000 UK consumers were surveyed on their attitude to trust, its relationship with customer experience and on loyalty and brand reputation. All research was completed in H1 2019.

A full report, including the study results, graphics and best practice recommendations for brands to transform customer experience is available at https://www.eptica.com/19cxretail.

An infographic on the results is available at https://www.eptica.com/state-uk-retail-customer-experience-infographic-2019.

Marketing spend set to remain stable in 2019
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80% of businesses plan to spend more or the same on PR in 2019 compared with 2018.

The findings are found in a new report, ‘Spotlight on Marketing,’ commissioned by marketing communications agency Voiceboxx.

100 communications professionals were asked a series of questions at the beginning of 2019 to help understand the nature of the marketing landscape for the year ahead, taking into consideration GDPR regulations and Brexit.

Out of those polled, 80% said that their budget for creative/branding would increase or stay the same for 2019, with creative design essential to direct mail, which all respondents were planning to invest in through 2019.

Digital tactics were also high on the agenda for marketeers, with 87% of businesses using video as a tool and the platform being the marketing tactic most respondents would like to utlise in 2019.

Other key points from the report revealed:

• 43% of respondents said their website needed improving in 2019
• 47% plan to spend more on their website in 2019, than they did in 2018
• Over half respondents said keeping up to date with social media trends was a challenge
• Most marketeers plan to invest more in strategy in 2019, than 2018
• 30% of respondents see new CRM system and staff training as essential for 2019
• 57% of businesses want to use social media advertising in 2019

Overall, the survey found that respondents saw 2019 as a year for improving communications across all channels, with analysis revealing marketeers already use a wide range of tactics, with new activity areas for 2019 being low priorities.

GUEST BLOG: Gauging the return on investment available from marketing
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According to figures published by Google in its Car Purchasing UK Report in April 2018, £115.9 million was invested in direct mail and online display by UK car dealers during 2016 alone.

While automotive manufacturers often have a substantial marketing budget available to them though, this is not always a luxury to firms when they are looking at their marketing campaigns.

Due to digital visibility not usually coming cheap due to the increased interest in online platforms, VW service providers Vindis takes a look at whether such investments are indeed worth the cost…

The automotive industry

Within Google’s Drive To Decide Report, which was created in association with TNS, a discussion took place about how the auto shopper of today is more digitally savvy than previous generations. In fact, over 82% of the UK population aged 18 and over have access to the internet for personal reasons, 85% use smartphones and 65% choose a smartphone as their preferred device to access the internet. These figures show that for car dealers to keep their head in the game, a digital transition is vital.

Research online will also be carried out by 90% of auto shoppers, the same report goes on to reveal. 51% of buyers starting their auto research online, with 41% of those using a search engine. To capture those shoppers beginning their research online, car dealers must think in terms of the customer’s micro moments of influence, which could include online display ads – one marketing method that currently occupies a significant proportion of car dealers’ marketing budgets.

Of the entire UK Digital Ad Spending Growth throughout 2017, eMarketer claims that the automotive industry accounted for 11% of the total. This placed the industry in second place behind the retail sector. The automotive industry is forecast to see a further 9.5% increase in ad spending in 2018.

As many car purchases still occur on the forecourt though, what effect is online having on influencing the decisions of auto shoppers? 41% of shoppers who research online find their smartphone research ‘very valuable’. 60% said they were influenced by what they saw in the media, of which 22% were influenced by marketing promotions – proving online investment is working.

Across the automotive sector, traditional methods of TV and radio continue to be the most invested forms of marketing. In the last past five years though, it is digital that has made the biggest jump from fifth most popular method to third, seeing an increase of 10.6% in expenditure.

The healthcare industry

An entirely different set of rules are followed for marketing when it comes to the healthcare sector. This is generally because it is restricted by heavy regulations. The same ROI methods that have been adopted by other sectors simply don’t work for the healthcare market. Despite nearly 74% of all healthcare marketing emails remaining unopened, you’ll be surprised to learn that email marketing is essential for the healthcare industry’s marketing strategy.

Email is used by approximately 2.5 million people as a primary form of communication. The use of email has also increased in value and usage over the past few years. This means email marketing is targeting a large audience. For this reason, 62% of physicians and other healthcare providers prefer communication via email – and now that smartphone devices allow users to check their emails on their device, email marketing puts companies at the fingertips of their audience.

Those in the healthcare industry should see online marketing as another platform that will make for worthwhile investment as well. This is especially the case when you consider that one in 20 Google searches are for health-related content. This could be attributed to the fact that many people turn to a search engine for medical answer before calling the GP.

According to data from the Pew Research Center, a search engine will be the starting point of 77% of all health enquiries. What’s more, 72% of total internet users say they’ve looked online for health information within the past year. Furthermore, 52% of smartphone users have used their device to look up the medical information they require. Statistics estimate that marketing spend for online marketing accounts for 35% of the overall budget.

Don’t forget the appeal of social media marketing either. Whilst the healthcare industry is restricted to how they market their services and products, that doesn’t mean social media should be neglected. In fact, an effective social media campaign could be a crucial investment for organisations, with 41% of people choosing a healthcare provider based on their social media reputation! And the reason? The success of social campaigns is usually attributed to the fact audiences can engage with the content on familiar platforms.

The fashion industry

The success of many fashion retailers will depend on their investment online. This point is underlined by the fact online sales in the fashion industry reached £16.2 billion in 2017! This figure is expected to continue to grow by a huge 79% by 2022. So where are fashion retailers investing their marketing budgets? Has online marketing become a priority?

Almost a quarter of all purchases in December 2017 were tied to ecommerce. This is according to the British Retail Consortium, as online brands such as ASOS and Boohoo continue to embrace the online shopping phenomenon. ASOS experienced an 18% UK sales growth in the final four months of 2017, whilst Boohoo saw a 31% increase in sales throughout the same period.

Next, Marks and Spencer, and John Lewis are just three of the well-known brands in the industry to have invested millions into their operations and marketing efforts online. Such tactics aimed to capture the online shopper and drive digital sales. John Lewis announced that 40% of its Christmas sales came from online shoppers, and whilst Next struggled to keep up with the sales growth of its competitors, it has announced it will invest £10 million into its online marketing and operations.

It also seems that many shoppers aren’t willing or interested to head to the high-street in order to shop. Instead, they like the idea of being able to conveniently shop from the comfort of their home, or via their smartphone devices whilst on the move.

In research carried out by the PMYB Influencer Marketing Agency, 59% of fashion marketers increased the budget they had available for influencer marketing last year. In fact, 75% of global fashion brands collaborate with social media influencers as part of their marketing strategy and more than a third of marketers believe influencer marketing to be more successful than traditional methods of advertising in 2017 – as 22% of customers are said to be acquired through influencer marketing.

The utilities industry

Comparison websites are now being used by so many consumers when they are trying to find the right utilities supplier for their needs. These websites could be the key to many suppliers acquiring and retaining customers.

Comparison websites often spend millions on TV marketing campaigns, which are then watched by so much of the nation. Therefore, it has become vital for many utility suppliers to be listed on comparison websites and offer a very competitive price, in order to stay in the game.

Compare the Market, MoneySupermarket, Go Compare and Confused.com are currently the four largest comparison websites. These companies are also among the top 100 highest spending advertisers in the UK, but does that marketing investment reflect on utility suppliers?

The difference between a high rate of customer retention for one supplier and a high rate of customer acquisition for another supplier can be determined through comparison websites. If you don’t beat your competitors, then what is to stop your existing and potential new customers choosing your competitors over you?

Instead of customer acquisition, British Gas has altered its marketing goals towards customer retention. Whilst the company recognise that this approach to marketing will be a slower process to yield measurable results, they firmly believe that retention will in turn lead to acquisition. The Gas company hope that by marketing a wider range of tailored products and services to their existing customers, they will be able to improve customer retention.

A loyalty scheme offering discounted energy and services has received a £100 million investment. This scheme focuses on the value of a customer, their behaviour and spending habits over time to discover what they are looking for in the company. The utilities sector is incredibly competitive, so it is vital that companies invest in their existing customers before looking for new customers.

Digital should be a key focus for those in the utilities sector too. 40% of all searches in Q3 2017 were carried out on mobile, and a further 45% of all ad impressions were via mobile too – according to Google’s Public Utilities Report in December 2017. As mobile usage continues to soar, companies need to consider content created specifically for mobile users as they account for a large proportion of the market now.

Concluding thoughts

Online marketing investment should be seen as very important for some industries, such as the fashion and automotive sectors. With a clear increase in online demand in both sectors that is changing the purchase process, some game players could find themselves out of the game before it has even begun if they neglect digital.

The picture grows even more for sectors such as the utilities industry. Whilst TV and digital appear to remain the main sales driving forces, it’s more than just creating your own marketing campaign when comparison sites need to be considered. Without the correct marketing, advertising or listing on comparison sites, you could fall behind.

The average firm is expected to allocate a minimum of 41% of their marketing budget to online strategies during 2018. This is according to webstrategies.com, with this figure expected to grow to 45% by 2020 too. Social media advertising investments is expected to represent 25% of total online spending and search engine banner ads are also expected to grow significantly too – all presumably as a result of more mobile and online usage.

Where do you stand when it comes to investment into marketing strategies? If mobile and online usage continues to grow year on year at the rate it has done in the past few years, we forecast the investment to be not only worthwhile but essential.

Sources

https://pmyb.co.uk/global-fashion-company-influencer-marketing-budget/

https://www.prnewswire.com/news-releases/the-uk-clothing-market-2017-2022-300483862.html

http://uk.fashionnetwork.com/news/Online-is-key-focus-for-UK-fashion-retail-investment-in-2017,783787.html#.WrOjxOjFKUk

http://www.mobyaffiliates.com/blog/retail-accounts-for-14-2-of-digital-advertising-spending-in-the-uk-in-2017/

http://www.thisismoney.co.uk/money/bills/article-2933401/Energy-price-comparison-sites-spend-110m-annoying-adverts.html

http://www.thedrum.com/news/2017/03/28/british-gas-shifts-acquisition-retention-marketing-know-the-value-keeping-the-right

https://www.independent.co.uk/news/business/news/uk-companies-online-advertising-spend-10-billion-more-last-year-2016-pwc-a7678536.html

https://www.webstrategiesinc.com/blog/how-much-budget-for-online-marketing-in-2014

https://www.kunocreative.com/blog/healthcare-email-marketing

http://www.evariant.com/blog/10-campaign-best-practices-for-healthcare-marketers

https://getreferralmd.com/2015/02/7-medical-marketing-and-dental-media-strategies-that-really-work/

UK ad spend ends 2018 on £23.5bn high note
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UK ad spend rose 5.1% year-on-year to reach £5.6bn in Q3 2018, marking the 21st consecutive quarter of market growth and the industry’s strongest third quarter of the year since 2015.

This record investment highlighted bu the Advertising Association/WARC Expenditure Report underpins the preliminary estimate for 2018 ad spend of £23.5bn – meaning the industry will have grown 6.0% year-on-year.

Key headlines from the report show:

* Q3 2018 was the 21st consecutive quarter of adspend market growth

* UK adspend rose 5.1% year-on-year to reach £5.6bn in Q3 2018

* The preliminary adspend estimate for 2018 remains at £23.5bn – meaning growth of +6.0% year-on-year

* Q3 2018 saw the strongest third quarter growth since 2015 – the first nine months of 2018 also saw the strongest growth since 2015

* Mobile saw a growth rate of 23.6% y-o-y in Q3, with overall internet growth at 12.3%

Overall market growth is being driven by increasing spend on online advertising, which is expected to grow 9.8% this year, following on from an estimated 13.4% rise in 2018.

In the individual formats, the positive story for digital was reflected across the board. Notably high growth was recorded for digital radio ad formats, with a year-on-year rise in Q3 of +25.1%, and in VoD TV at +11.5%. Regional digital newsbrands witnessed growth of +10.9%, with national digital newsbrands measuring +3.7% growth, and digital magazine brands +1.5%.

Discussing the findings from the report, Stephen Woodford, Chief Executive at the Advertising Association, said: “UK advertising continues to perform strongly, now delivering its twenty-first straight quarter of growth and demonstrating the commitment of British advertisers to investing in the growth and success of their businesses.

“As the clock ticks down to our departure from the EU, it is crucial the Government provides the certainty we are all seeking in business. We are predicting continued adspend growth of 4.6% in 2019 and an agreement with the EU that keeps disruption at a minimum and keeps trade and talent flowing will greatly help this growth. UK advertising is the best in the world and we need a deal that ensures we keep it that way.”

James McDonald, Data Editor at WARC, said: “Our projection of 4.6% growth in the UK’s ad market this year is firmly based on a business- favourable outcome from the EU withdrawal agreement, and would mark a decade of continuous expansion since the last advertising recession.

“Further, a preliminary estimate of 6% growth in advertising investment last year represents a faster rate of expansion than was recorded in 2017, and is therefore indicative of an industry in rude heath. This is particularly true in relation to digital ad formats, all of which are currently forecast to attract higher levels of investment in 2019.”

UK marketing spend stagnates as Brexit takes its toll
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A six-year run of continuous overall UK marketing budget growth came to an end in Q4 2018, with a net balance of +0.0% of marketing executives signalling no change in budgets during the fourth quarter.

That’s according to the latest IPA Bellwether Report, which says that while some marketers reported growth (+16%), this was completely offset by others observing spending cuts (-16%).

In addition, roughly two-thirds of panel members reported no revision to their total marketing budgets. Evidence from some marketers highlighted some optimism for the coming year, with new product launches, expansion into overseas markets, digital transformation and technological development all expected to bring growth opportunities.

However, political and economic uncertainty caused by the ongoing Brexit negotiation process has dampened both business and consumer confidence, driving belt-tightening and restricting resources available to marketing executives.

The shift towards digital modes of advertising remained apparent during Q4, although growth moderated noticeably, as signalled by the net balance for internet falling to +2.1%, from +13.6% in the third quarter (within internet, search/SEO dropped from +5.8% in Q3 to -3.9% marking the first cut since Q2 2009; mobile advertising budgets were also revised down to -2.4% from +1.9% in Q3).

However, it was budgets for sales promotions that marketing executives enjoyed the greatest upward revisions for, with the net balance increasing to +3.8% from +0.6% in Q3. Events budgets also saw a slight increase (net balance of +2.6% from -1.1%), however panellists observed cuts to the remaining categories monitored by the Bellwether survey.

The first downward revision for two quarters was seen for main media advertising, which includes large-scale campaigns on TV and in newspapers. The net balance fell to -6.5% from +4.8%. Direct marketing (-5.6% from -7.4%), market research (-4.7% from – 3.7%), and PR budgets (-4.1% from +4.2%) were also areas of marketing that companies experienced a squeeze on spending.

Looking towards the 2019/20 financial year, preliminary data from the Bellwether panel indicated a near-neutral stance on overall marketing spend for the coming budget period. The proportion of marketers anticipating increased marketing expenditure (27%) was only marginally higher than that for those predicting cuts (26%), yielding a net balance of just +0.8%.

However, drilling down into the individual budget plans for each Bellwether category revealed a fairly negative outlook. A number of marketers expressed concern towards the adverse impact of Brexit-driven economic and political uncertainty on both consumer and business confidence. In some cases, there was evidence that the potential for a more challenging corporate environment was set to restrict financial resources available to marketing executives.

Paul Bainsfair, Director General at the IPA, said: “In uncertain political and economic times such as these, the understandable reaction for some advertisers is to lose confidence in brand building advertising and to think short term even to the point of heavily discounting their products and services. We’ve seen this on and offline in the run up to Christmas – and now see the impact in black and white in this latest Bellwether Report. We know from the research we have done into what builds and what destroys brands – and it is proven – that too much short-term sales promotion activity destroys brand value in the long term. Marketers need to weather this turbulent period and think ahead. Now is the time to be bold, to keep up their share of voice and, if they can, increase it to grow their share of market. Businesses that rely on the strength of their brands need to follow the general 60:40 (brand building vs activation spend) rule of thumb.”

Joe Hayes, Economist at IHS Markit and author of the Bellwether Report, said: “The slowdown in marketing budget growth seen in recent quarters culminated in Q4, as the six-year bullrun came to an end. Company-wide indecisiveness restricted the allocation of resources to marketers, as the wait-and-see approach to how the Brexit process will transpire appears to be the current strategy in place for many UK businesses. “The neutral stance on marketing budgets came in tandem with a first pessimistic outlook by businesses towards their own companies’ financial prospects for the first time since 2012, suggesting that top-level belt-tightening and plans to protect margins has seen marketing executives be given less discretion. Indeed, provisional data for budgets for the coming 2019/20 financial year indicate that downbeat stance seems likely to persist.”

James Goddard, Chief Executive, JJ Marketing, said: “This early part of 2019 is inevitably a time when uncertainty reigns but it’s no good standing still and weeping into your spreadsheets. For one thing, there remain areas of optimism, including digital transformation and the opportunities provided by technology. And, it’s now more important than ever for agencies to be able to react quickly to change. In the coming 12 months, expecting the unexpected will be crucial. Therefore, we need to focus on being flexible and innovative. Add strategy, creativity and accountability on top and taking advantage of a changing landscape will be more achievable than you might expect.”

Tom George, CEO, GroupM and Chair of the IPA Media Futures Group, said: “By the time the latest Bellwether report is published, we will know the outcome of parliament’s vote on the government’s Brexit proposal. Whether this provides any further clarity on a resolution is highly doubtful however. What is clear is that uncertainty is not the friend of economic optimism and the latest Bellwether sentiment reflects this.

“Advertising is also not immune to uncertainty and this is highlighted by a net balance of -6.5% for main media (a scale of decline not seen since 2009) and a softening in the positive sentiment for internet, search & mobile of +2.1%. The good news for the sector is that all commentators still report growth in ad expenditure for 2019 on the back of 6% growth in 2018 – our own GroupM forecasts predicts growth to 4.6% for 2019. Of course, what plays out over the course of the next few months may supress this relative optimism. To continue on a ‘glass half full’ theme, even the most pessimistic estimates I’ve seen for the impact of a no-deal Brexit scenario, don’t approach anywhere near the levels of decline for we witnessed in 2009. Watch this space.’’

Patrick Reid, CEO EMEA, Imagination, said: “As the expectation for brands to create more imaginative experiences grows, the current climate highlights the need for clients to work with a creative partner who can deliver effective, efficient and agile creative solutions. With exciting developments in technology, collaborative ways of working and more rigorous measurement, you can produce powerful experiences which deliver meaningful results despite the constantly evolving landscape.”

Pete Robins, Managing Partner, Agenda21 and Chair of the IPA Digital Media Group, said: “For once in a very long time, overall market pressures have even dented the growth rate of internet reacted spends. However, also worth noting that the prominence of businesses looking to continue or advance their digital transformation, could mean that once these initiatives are sufficiently progressed that growth in connected media channels will be at the forefront of their plans once the uncertainty in the market has acerbated.”

James Pais, IPA Scotland Chair and Creative Services Director at Frame, said: “Last year I commented that the Q4 Bellwether report would make for some interesting reading. I was trying to be optimistic here.

“Alas the uncertainty of Brexit has generated grave concerns and a lack of confidence which as a result meant that the findings in this Bellwether report have a rather pessimistic and downbeat outlook. The predicted reaction for advertisers to reduce their adspend in the later part of 2018 is evident in this report and to misquote D:Ream, things don’t look like they’re going to get better. There is a rather negative outlook to budgeting in 2019/20 with still further concern towards the adverse impact of Brexit on the economy and the effect it will have on both consumer and business confidence.

“So again, the 2019 Q1 Bellwether report will make for some interesting reading, by then hopefully we will have some clarity as to our new relations with the EU. As an optimist I want to be encouraged by the Office for Budget Responsibility projection of a bounceback in business investment, and the Bellwether prediction of an upward revision to adspend forecast for 2019, but I guess we will see in a few months, right?”

Recession predicted for UK ad market in event of ‘no deal’ Brexit
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UK ad spend will fall by nearly £1.4bn in 2019 in the event of a ‘no deal’ Brexit, according to latest predictions.

Enders Analysis says it will be the first time the country’s £23bn ad market has contracted in more than 10 years – down 3% to £22.54bn.

However, the firm also modelled a ‘deal’ scenario, in which the market would still grow in 2019 (up 2.7% to £23.9bn) but would still be down on 2018 growth (4.7%).

A no deal scenario, meanwhile, would see a stagnation in online display ad spend, which has seen robust growth over the last decade.

The last time the UK ad market contracted was in 2009, when it slumped 13% in the wake of the global financial crisis.

However, Enders has cautioned against brands rolling back ad spend too drastically:

“The advertiser response will be to become more tactical in allocating advertising spend, but evidence from the last recession suggests that ‘going dark’ with brand display spend can be a long-lasting mistake.”