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Marketing budgets up in 1Q 2019

The net balance of marketing executives reporting upwardly revised budgets increased to +8.7% in Q1 2019, up from a +0.0% reading for the final quarter of 2018 and the highest since Q3 2017.

That’s according to the latest IPA Bellwether report, which says around 21.6% of panel members observed spending growth, compared to 12.8% registering budget cuts.

The quarterly report says that while the Brexit uncertainty that is shrouded over the UK’s political and economic climate continued to prompt belt-tightening and a delay in decision-making, other companies took a more pro-active approach and looked to push resources into their brands, enhancing digital marketing methods and expanding presence on social media platforms.

Firms were also wary of rising competitive pressures, leading some to diversify product offerings as part of efforts to enter new markets and attract new clients. As such, there were reports of boosting marketing spend as a defensive mechanism to protect brand reputation.

Nevertheless, the IPA Bellwether says unfavourable global economic conditions, coupled with fears of falling business and consumer confidence prompted caution over discretionary spending in some cases.

The best performing category of the Bellwether survey was internet, which saw its net balance jump from +2.1% to +17.2%. Firms showed a strong appetite to enhance their digital footprints, with Search/SEO spending (+14.2% from -3.9%), as well as targeted advertising on mobile (+3.6% from -2.4%) all receiving boosts. A renewed drive for big-ticket advertising campaigns was also apparent during the opening quarter of 2019, with main media marketing returning to growth (+5.2% from -6.2%). Events was the third and final Bellwether category to register expenditure growth (+3.4% from +2.6%).

However, market research, sales promotions and direct marketing budgets were all revised lower during Q1, with net balances of -4.2% (from -4.7%), -3.7% (from +3.8%) and -3.5% (from -5.6%) respectively.

Marketing executives erred on the side of caution with their forecasts for marketing spend for the 2019/20 financial year. A modest net balance of +3.4% anticipate budgets to grow during this period, which was notably weaker than past forecasts made before a new financial year and the lowest since 2009.
Although approximately 26% of panellists foresee growth, the remaining 74% expect cuts or no change. Compared to this time last year, a net balance of +18% of firms anticipated budget growth for the 2018/19 period.

Positive expectations were centred on main media marketing campaigns and advertising at events, which yielded net balances of +4.8% and +2.5% respectively. Some companies expect that brand-building initiatives seen during the most recent quarter will continue through the coming financial year, as they look to defend their brand and stave off tough competitive pressures. Plans to launch new products in some instances were also seen as opportunities for marketing budget growth.

Nevertheless, firms were much more downbeat for the remaining Bellwether categories. Negative outlooks were recorded for other marketing (-13.1%), PR (-7.0%), sales promotions (-5.3%), market research (-4.0%) and direct marketing (-1.8%).

Marketers’ confidence levels remain significantly negative

Following the first downbeat outlook towards own company financial prospects since Q3 2012 during the previous Bellwether survey, latest data showed no signs of an improvement. A net balance of -2.7% of surveyed marketing executives indicated a pessimistic assessment towards their company’s finances, compared to -0.9% during the final quarter of 2018, thereby indicating a stronger degree of negativity.

Industry-wide financial prospects also remained pessimistic during the first quarter. Although the net balance of firms casting a downbeat assessment was slightly lower than previously, registering -22.6% (- 28.6% in Q4 2018), it still signalled one of the most negative industry-wide outlooks since the global financial crisis.

Paul Bainsfair, IPA Director General, said: “This sharp increase following Q4 2018’s flatlining signals that UK marketing budgets have received a much-needed kiss of life in an economy gripped by Brexit uncertainty. The smart marketers realise that to grow their businesses, they must invest in them, particularly in mass reach, long-term media. While the forecast for the year ahead remains uncertain given the seemingly endless Brexit negotiations, those that want real competitive advantage should follow the proven rule that if you increase your share of voice above your share of market, you should expect to experience growth.”

Joe Hayes, Economist at IHS Markit and author of the Bellwether Report: “A return to growth in marketing budgets during the opening quarter of 2019 may come as a surprise given the uncertainty that shrouds the UK political and economic climate has only built further since the previous Bellwether Report. However, some companies began to show a determination to step up brand-building and protection in these challenging times, taking a pro-active, yet defensive approach in the face of business belt-tightening and weakening consumer confidence. That said, cautious undertones were still apparent in budget plans for the 2019/20 financial year, with panellists providing only modest growth expectations in available marketing spend. In fact, the outlook was the most subdued since 2009.”

Marketing spend set to remain stable in 2019

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.

Business leaders in the dark over marketing budgets and activity

Thirty-seven per cent of business leaders admit they don’t know what they are spending their marketing budgets on, according to a survey of 1,021 UK workers.

The study, carried out by MarketingSignals.com, also revealed that more than 1 in 3 (35 per cent) said they are unsure as to whether the marketing budget has increased or decreased in the last financial year.

In addition, the research found that 21 per cent of business leaders don’t even know what audiences their marketing campaigns are targeting. A further 16 per cent confessed they are unsure as to which marketing channels they have used for this activity.

And nine per cent of business leaders surveyed said that they don’t know what marketing measurement techniques the company has employed.

Gareth Hoyle, managing director at MarketingSignals.com, said: “The research shows how business leaders are worryingly unaware of the marketing activity that is being carried out for their company. From the budget, the target audience to measurement methods, there are a number of marketing practices that business leaders aren’t up to speed on, which play a crucial role in the success of the business.

“Of course, those at the top often have a lack of time to study campaign activity in depth, but they are often the most well informed on the overall strategy of their business, making it an imperative that they understand the detail of their current marketing efforts.

“Ultimately, the bottom line of any business is to make money and marketing is an essential component of this process. Moreover, marketing can impact on a business in many different ways – from increasing sales, to growing the business and engaging customers. Therefore, it is extremely important that business leaders make more of a concerted effort to recognise what marketing activity the company is undertaking.”

9% of UK marketing professionals plan to spend £100,000 on influencers

Research by UK-based digital marketing firm Takumi has found that 9% of UK marketers are expecting to spend over £100,000 on influencers during the next 12 months.

Only 4% of marketers polled said that they had no plans to spend money on influencers.

39% planned to spend up to £10,000, with 20% estimating a potential spend between £10,000 and £100,000.

“A lot of people are saying that influencer marketing is an over-hyped fad – that there’s no ROI and it’ll soon disappear. But as these results show, it’s clear influencer marketing is here to stay. Brands recognise its value and are therefore dedicating big budgets towards it,” commented Mats Stigzelius, co-founder and CEO of Takumi.

“Of the professionals we surveyed for example, 61% stated they now feel they are able to accurately measure engagement levels and return on investment, and as platforms like Instagram continue to roll out new features to signpost promoted content, that’s only going to increase.”

The figures support the belief by many marketers that working with influencers is an effective strategy to pursue, with 26% rate influencer marketing as much more effective at targeting consumers than other forms of of advertising, such as adverts on social media channels.

“The size of the accounts used in marketing campaigns is particularly interesting,”added Stigzelius.

“Many people still wrongly prefer macro influencers with hundreds of thousands of followers, but the reality is that you now reach the same audience with micro influencers, while also benefitting from higher engagement.

“For example, working with a celebrity might give you one social media post. Working with micro influencers, you could generate the same reach and 100 pieces of social content with exactly the same budget. From our experience, we’re seeing more and more brands realise that celebrity isn’t everything and ditching big names in favour of micro-influencers. It’s a trend we only expect to continue.”

IPA Bellwether reports UK digital ad budgets rise

The Institute of Practitioners in Advertising’s (IPA) Bellwether reports marketeers have revised their budgets upwards in the first quarter of 2017, the highest level recorded in almost a decade.

Some 26.1 per cent of those companies polled remain positive about 2017/18 budgets, signalling growth for the coming year,  while 11.8 per cent of companies said that marketing budgets would increase during the first quarter of 2017.

32 per cent of those companies polled also reported improvement in the financial pipeline, compared to 19 per cent that predicted things would be worse during the quarter.

The IPA reported marketers on tighter budgets are seeing greater value from digital and positioning ad spend accordingly, mostly as a direct result of the unknown effects of Brexit negotiations and wider economic uncertainty.

However, despite a positive outlook for digital ad spends in 2017, the IPA predicts stagnation materialising in 2018, with marketers being advised by experts to proceed with caution.

Speaking about the report, the IPA’s director general Paul Bainsfair said: “The election result has thrown further uncertainty into an already volatile environment.

“It is inevitable that this has had a knock-on effect on UK. Specifically, for marketers this has meant a desire, where possible, to seek out more activation driven advertising. As evidenced strongly in this latest Bellwether Report, this has resulted in a further move towards advertising in the digital space.”

Marketers rely on data to manage client and agency relationships…

A recent survey from the Association of National Advertisers (ANA) has revealed that more than 80 per cent of advertisers are using data as a tool to help them manage agency relationships.

ANA, in partnership with Decideware, explored the use of data in broad categories of the client/agency relationship, including: tracking of agency hours, agency performance evaluations, production costs, creative/copy testing and media efficiencies/budgets.

The survey of 92 ‘client-side marketers’ found 90 per cent see data as a way of improving agency efficiencies; 84 per cent believe the use of data will grow in their organisation; and 78 per cent state data improves internal efficiencies at a client’s organisation.

ANA Group EVP, Bill Duggan said: “Data helps build better relationships between the client and agency, helping both parties to focus on outcome. And at a time where there are transparency issues in the industry, the use of data enhances trust.”

Among the 37 performance metrics evaluated, media-related metrics account for seven of the 10 highest-rated metrics for importance, with delivery of total campaign audience goals, efficiency of media buys and media quality assessment rated the highest.