Investing through Tough Times: Industry Responds to IPA Bellwether Report for Q4 2023

So many companies revising their budgets upwards with such optimism is great news for agencies. Overzealous cost-cutting is an easy trap to fall into when faced with a lagging economy, so it’s promising that businesses see the long-term value in brand building through advertising and are willing to open their wallets accordingly. We need businesses to stimulate growth this year, and advertising plays a crucial role in that.

We predicted that live events would see a resurgence in popularity this year and these figures seem to support that. Its net upwards forecast of +15.1% shows that in the UK at least, companies are realising the value that immersing customers in unique experiences can have on forging lasting connections and loyalty. Whether brands continue this investment throughout 2024 remains to be seen but these figures paint an encouraging picture that the segment’s positive momentum will continue.

One aspect which stood out to me is the positive glow around events; The report citing a 15.9% upward revision to budgets here, rising to a 17.8 % increase in spend for 2024.

 

These are not insignificant numbers and I believe demonstrable of a marketing, brand and cultural space with a shifting realisation; screen scrolling alone doesn't cut it, culturally. The best ads disappear in days, and to resonate with consumers you need to be anchored deeper into culture. You need a physical space, a tangible coming together of brand and audiences, where connection is more emotive and less throwaway. Couple that with the rise of hybrid (streaming as well as physical footfall), and a huge sporting year on the cards (Euros, Olympics) it seems everyone is tuning into the importance of the real life fan event for 2024. 

There are definitely some positives to take. It’s showing that businesses are recognising the importance of the need to continue investing through tough times – and the role that marketing as a whole can play in that. 

But despite the positive headlines I think it’s really important to have a reality check and recognise that things will remain fairly choppy for a good while yet. 

On the ground, the reality is that budgets are being shifted, if not cut. They’re being shifted into short-term media such as direct response, at the expense of longer-term media channels. 

For a sustained upturn, you need those businesses committing to long-term projects and wider brand-building activity. Which, depending on the sector and individual company performance, may take time. 

From an agency perspective, that means having the agility to be able to shift between approaches as required by clients, as well as the maturity and ability to guide them along the journey and allow them to take both short and long-term action.

As budgets have climbed to their highest level in a decade, the content treadmill that powers the advertising ecosystem is running on full blast. So while it may be a new year, CMOs continue to be haunted by familiar pressures - critically, to drive marketing efficiencies while delivering creative content that unlocks campaign success.

The problem is, brands aren’t making the most of their budgets. Budget wastage due to inefficient content production has become a problem worth quantifying. In fact, research shows that 52% of F500 creatives produced by brands are never activated, meaning that those ads are paid for but never actually used. Extrapolated across the industry, this suggests $100 billion is wasted on assets that are never used, a growing content landfill of sorts. Of those that do make it to market, less than 1/3rd is optimised for their environment and have a low Creative Quality Score.

With major ad-land moments like the Super Bowl and Valentine’s Day around the corner, marketers need data-informed and technologically scalable ways to make the most of their budget. That means knowing what content you’ve got, not making more than what you need, and setting what you have up for success. Brands like Bayer are already leveraging AI tools like Creative Lifecycle to gain this visibility into their end-to-end content production process, thereby uncovering global and local investment opportunities. Most of our ads are hardly working - let’s put them back to work this year before GenAI ramps the speed up on that content treadmill.

Despite ongoing economic issues in the UK, it’s very encouraging that brands are investing in long term relationship building strategies such as events/experiences. Amidst the uncertain UK economy, brands are now recognising the importance of shifting their focus from short-term incentive marketing to building stronger consumer connections. This strategic move allows brands to meet consumers where they are and ultimately secure a larger market share.

 

  

This report is an exciting marker for those of us working in the media. The overwhelming optimism reflects the consistent value brands are putting on their media spend even when battling through the more challenging periods. That being said, this report suggests 2024 should be less of a battle, rather there will be plenty of opportunity for experimentation and innovation in the way brands invest in their creativity.

We expect this sense of optimism to spread through consumers too – with people wanting to spend more time outside and enjoying experiencing things in real life, with friends and family. Here emerges a particularly exciting opportunity for those looking at the ‘Out of Home’ sector. Brands are poised this year to facilitate spaces – through boundary pushing creatives - for people to connect and in doing so generate a deeper and more lasting impact on the consumer.

It’s great to see that the latest report is optimistic. Marketers across industries understand the importance of investing in connecting with relevant audiences and generating ongoing brand awareness and consideration. It's encouraging to see this reflected in many areas of growth. We have noticed this, particularly with how clients invest in Out of Home (OOH), wanting to get closer to audience targeting and effectiveness metrics. This is bolstered by significant developments in programmatic, which allows brands to further connect with consumers in more highly targeted ways than ever before.

It's not surprising to see the strong growth in events which ties in with us seeing a real shift in people wanting to spend more time outdoors, connecting with the environment and people around them, and experiencing the real world. This calls for brands to create exciting and inspiring experiences that truly engage and offer something meaningful to be experienced together. This not only builds brand awareness but delivers bottom-funnel results too when combined with PrOOH campaigns.

Despite the ongoing socio economic turmoil in which businesses face persistent inflationary pressures, impending recessions, and a cost-of-living crisis, the latest Bellwether report predicts that there is hope for 2024 after all. 

It is reassuring to see marketing budgets are up, with direct marketing, one of the main drivers, seeing its greatest upturn since 2005. In the current climate, there is no room for a one-size-fits-all approach. And, as AI capabilities such as automation and personalisation emerge, those who fail to adapt and invest in such technologies to improve customer experience quickly will fall behind.

The ability of AI to address one of the report's key macro issues, climate change, must also be considered, and is reflective of many of the conversations we are having with clients. Consumers are becoming more environmentally conscious, and businesses are under increasing pressure to align their strategies with sustainability goals. As a result, prioritising the development of impactful and low-waste content is critical, as it serves as a catalyst for change. 

This is where investing in employee upskilling and training in AI and its capabilities comes into play. With a strategic, informed, and ethical approach, businesses can harness AI's full potential to effectively address environmental challenges through education and collaboration.

We have incorporated this concept into our content strategy by using AI to determine which content works and which does not. This means we can create meaningful content in the moments that matter while reducing linear content that is not used.

Events and in-person experiences are yet again proving to be resilient in a volatile market. 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. Marketers need to remain agile, keeping a close eye on evolving consumer behaviours and technological changes.

The IPA Bellwether Report’s general optimism, cut with a dash of caution, is instructive. 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.

 

It’s interesting to see video advertising reporting its highest reading for three quarters, up from +0.9% net growth to +6.6%. And while online video ads have become an essential tool for modern advertising campaigns - they target specific audiences, provide valuable insights for marketers and can be cost-effective - we firmly believe established channels such as TV and OOH are still critical ingredients in brand growth. Especially when seamlessly combined with performance marketing in  social and digital. 

For example, we recently launched the first ever campaign and TV advert for Joe Wicks’  The Body Coach app and have worked with premium yoghurt brand, The Collective, driving awareness through OOH advertising.

 

In 2024, we could see a huge rise in DOOH (digital out-of-home) with WARC Media highlighting DOOH globally is set to reach $11.5bn. DOOH ad spend is also expected to grow faster than any other channel with forecasts suggesting that it will take up a 29.4% share of global OOH spend, up from 17.8% in 2020.

The latest IPA Bellwether report conveys a sense of cautious optimism amidst the slow growth of marketing budgets. While the potential for a shallow recession looming in the first half of the year, it emphasises the importance of brands maintaining consistent marketing spend to weather the storm and emerge successfully in the long run. The report also highlights the resurgence of direct marketing, which thanks to more interactive content and the development of technologies like chatbots and AI, 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.

 

It's good to see the latest IPA Bellwether report highlighting significant opportunities for agencies in 2024. I don’t know any agency heads, or owners, that haven’t experienced some of the 2023 challenges it also talks to. This demonstrates that UK businesses still see the importance of marketing, even in a challenging economy, and hopefully that offers the optimism the industry has been craving. For creative agencies like ours, it's crucial to acknowledge and adapt to these tough conditions by ensuring our work is as efficient and impactful as possible, making every marketing pound count. For us, that starts with understanding their customers. By deeply understanding the ever-evolving attitudes, behaviours, and actions of consumers and developing creative solutions that genuinely enhance their daily lives, we are better positioned to help brands keep up and stand out. Whilst the report is encouraging, the agency landscape is no less crowded as we get into 2024, the need for agency models to adapt and change is probably more critical than ever.

Agency leaders will need to be laser-focused on servicing the business of their clients’ brands to give CMOs further confidence and to lend weight to their board-level case for continuing to invest in their marketing plans.

 

Everyone needs to be constantly reminded of the virtue of brand investment for the short and the long run, to manage expectations and to set realistic targets. Agencies will need to be actively pursuing opportunities to grow their client base: identifying potential clients in sectors showing positive trends and growing their client portfolio more generally i.e. deploy a very basic kiss-more-frogs-strategy. A more sophisticated way to work with more clients is to ensure that you can genuinely support their growth ambitions by offering a diverse set of marketing services and using the power of integrated thinking to help their brands go beyond.  

Finally. Some optimism. For the first time in five years, more companies are willing to hustle in 2024 than those looking to be cautious. Hurrah. It's the optimism we've all been waiting for after four shitty years of cautious marketing and being in perpetual crisis. Perhaps more companies are seeing that investing in their Brand in times of uncertainty will increase long-term loyalty. Or maybe companies are just desperate to take action after so much inaction. Better late than never, eh! It's no different for agencies. This year, we'll continue to dream big and invest in our clients, our people, and our brand. We'd be doing this whatever the Bellwether report says, but at least now, we can do it with unrelenting optimism.

It is refreshing to see positive headlines from the latest IPA Bellwether report around the strength of marketing budgets despite continued economic uncertainty. There is no doubt that there are still many challenges that will face our industry this year. What remains clear is that the value of creativity, adaptability and optimism is crucial to influencing the culture of the nation and long-term brand-building. While I don’t have a crystal ball (which would be VERY handy!), as the competition for attention across platforms gets even more crowded, I believe that we need to stick to the fundamentals, because they won’t change. Over the next 12 months, media owners need to make it easy for brands to access, buy, understand and evaluate what our medium brings to their media buying plan

As predicted, 2023 proved to be a tough year with energy costs, tax and interest rates the highest they have been in many years, putting strain and pressure on brand marketing

budgets, so having read the recent IPA Bellwether report, it’s incredibly encouraging to hear how brands are continuing to spend through these tougher times to support customer loyalty and benefit the long-term health of their brands.

Whilst there is greater positivity on marketing spends, we are all aware there are continued challenges ahead that we need to navigate with our clients as the cost of living is at an all-time high, putting pressure on much greater competitive product pricing and our brands having to work that much harder to make a profit.

But, as is so often the case, in challenging times, creativity prevails!

In 2023, we loved seeing greater collaboration between agencies – strategy and creative, media, PR and activation partners all pulling together to help one another succeed, thinking differently and hustling to make budgets work as hard as possible to achieve maximum impact and cut through. A great example we think of doing just this was our bold campaign for Estrella Galicia ‘Spanish not Spanish’ which demo'd brilliant challenger brand behaviours and created a real stir in the industry and with consumers alike.

I also read with interest the drop in spend in main media and increase in events and DM, and have been buoyed seeing so many more brands connecting better with culture, being more interesting and connecting with the things that their audiences care about.

This year, I hope to see creativity continue to flourish in the face of adversity, knowing creativity can be the strongest differentiator for growth. I am looking forward to working with

our brands and the wider industry to think about different ways to cut through the noise.

 

With all the public conversation about recession and economic slowdown, it is reassuring to see marketing budgets being revised upwards not only for the traditional golden quarter but for the initial budget setting for 2024 as well, suggesting that the move towards marketing as an investment rather than cost centre has taken place. However, there is a wide divergence in how marketers feel about their prospects – the macro category sentiment is negative, but the belief in their own business is positive.

 

With around 12% of marketers reducing budgets, this is not a uniform direction but is at least a clear indicator of a trend. However, it is when we look at the details of investment that a more interesting picture emerges. Event and direct marketing were the main drivers of Q4 activity, with PR and sales promotion also making a contribution. Clearly, getting in front of consumers and credible earned media is essential. This will only become more important in 2024, AKA the biggest election year in history, due to deep fake AI content and disinformation. The channels that focus on those real-world connections will be the ones that win. 

While challenges persist, the Bellwether report paints an optimistic picture for the marketing landscape, reaffirming the resilience of the industry and the strategic importance of sustained advertising efforts in navigating economic fluctuations.

As a global social media agency closely monitoring industry trends, the report reveals a remarkable surge in UK marketing budgets and aligns with our understanding of the growing importance of digital platforms both locally and globally. Notably, events marketing budgets continue to soar, suggesting a renewed focus on immersive experiences, something we are particularly excited about due to the synergy between social and experiential marketing.

The report's emphasis on brands maintaining or even boosting advertising investments during challenging times resonates with our strategic approach and advice to our household name clients too. 

Plus the shift towards long-term brand-building aligns with our focus on leveraging social media for sustained brand engagement and growth.

With an industry push to put the consumer first even further in a financially difficult economy, plus ‘more fun’ campaigns, social first solutions should thrive in this predicted environment and we are excited about making social even better in 2024.

The Bellwether report is a much-needed injection of confidence after a challenging few years for the industry.   

What’s particularly interesting is where investment is likely to increase: events, online, and direct marketing emerged strongly versus more traditional channels. As the report notes, “Main media is no longer the top performing Bellwether category,” suggesting an important tipping point in how we build fame at the intersection of data, experience and content. This aligns with our own Dentsu Creative studies that show clients’ number one priority is owning their audience in a world of disintermediation.  

It's also interesting to note that clients are significantly more optimistic about the performance of their company versus their industry. It will be fascinating to see the briefs and challenges that emerge from their appetite to outperform  or disrupt the sector.  

As we think about disruption, it’s also important to note that while inflation may be easing, an increasingly volatile climate will continue to drive increasingly volatile pricing in sectors from insurance to olive oil. A sustainable recovery can only be driven by sustainable consumption.   

The pervasive uncertainty of the global economy is a factor that all brand leaders have had to grapple with in recent years, with covid and the cost-of-living crisis looming large over every decision. The upward budget trend cited in the Bellwether report, whilst counterintuitive, is also reflected in our own research. In our latest CMO Barometer 83% of the CMOs and senior marketers we spoke to predicted that marketing budgets will grow by up to 10% in 2024.

Another bright spark in the report was the positive sentiment around events. Perhaps reflecting pent-up enthusiasm that we all feel for real human contact post covid. This too is backed up by what we see in our experiential business and the sentiments amongst our clients who have expressed a clear appetite for more face-to-face interactions. Connection and personal relationships are more important now than ever. We believe that brands looking for business impact need to start with a deeper human understanding, and this category certainly lends itself to building strong human connections.

We’re feeling optimistic but with so much uncertainty on the horizon it will be great for the industry if predictions play out.

 

‘Marketing budgets at the strongest level in a decade?’ and boy can’t we feel it. It’s palpable. But this goes way beyond commercial outlay.

There was an undeniable shift as the industry prepared to leave 2023 behind.  For the first time in a long time, brands were equipped to lean into forward planning and map out their 2024 business and marketing strategies. A rediscovered confidence and stability that enabled decisions and risks, and that’s contagious. The ‘what ifs…?’, ‘imagine…’ and ‘let’s just do it’s’ have leapt back into agency lexicons. 

It's right to say that, much like we saw through the pandemic, companies that continue to invest in their brand – along with a Marketing Director that ‘believes’ – are succeeding in maintaining customer loyalty. 

A strong brand, paired with presence, are a clear route to profitable growth and there is NO doubt that using main media - whether trending + or -, and its ability to achieve mass market reach, plays a central role in effectiveness. 

That said, as the Q4 Bellwether report confirms, we continue to see other categories grow. It’s been really enjoyable to witness and experience (including Ardmore) agencies proactively evolving their integrated offering, shaped around the new needs of brands as they navigate the changing consumer. 

For me, looking ahead, we mustn’t leave that energy, bravery, and ambition behind. 

 

We don’t need the Bellwether report to tell us that we aren’t out of the woods quite yet. With my pint glass half empty, we are still in the midst of a UK cost of living crisis, US inflation continues to accelerate, EU retail sales are in stagnation, China is challenged by deflation and falling exports and let’s not forget two international wars. Historically a backdrop like this would spell uncertainty and inevitable budget cuts whilst nervous brands weather the storm. But despite all this, thank you Bellwether for indicating that my pint glass might not be so empty.

 

Q4 saw the highest marketing budgets in almost a decade. And whilst recession is predicted in the first half of 2024, business and consumers seem to be familiar with the bumpy road with marketing budgets generally looking robust for the next year and consumer confidence on the rise.  Particularly exciting news for the event sector which had such a hard time through covid with predicted growth of 15.%.  Brand building investment seems to continue to take a back seat to direct marketing which is disappointing given the evidence supporting the success of brand investment during harder times. But overall, my half pint looks pretty full.

The latest Bellwether report makes for optimistic reading. After a difficult 2023 it's pleasing to see that marketing budgets continue to expand.  It's well known that marketing through downturns, recession or not, can supercharge brands which would explain this trend, with brave CMOs that are able to defend their marketing spend to their boards who will feel this benefit.  What is interesting is the shift away from main media continues and this chimes with what we've been seeing with our clients. We find the best ways to supercharge a brand's impact, at any time, is to ensure that there are enough performance cues in the 'brand' channels and enough brand cues in the performance channels ensuring that the sum total is as effective and impactful as possible. If brands continue to adopt this approach and do the fundamentals of truly understanding their audience and connecting with them in new and inspiring ways then they will come out on top.

One of the things I love the most about the marketing industry is the relentless optimism. It’s what keeps us doing what we do, and that positive mentality brings with it a kind of resourcefulness and innovation that gets us through even the darkest of economic times.

So I’m not at all surprised to see  a headline that tells us, “Marketing budgets are revised up to the strongest levels in almost a decade!” It’s lovely to see, and the good news boost we all need. But I’m not sure many of us really believe it.

The report underscores the tough reality that marketing budgets, while not exactly shrinking, are being spread into more places and spaces than ever before, diminishing their power. And it doesn’t shy away from the fact that we’re entering a shallow recession, with cost of living pressures persisting, and we have a year of global political and electoral upheaval ahead of us.

In truth it’s telling us that 2024 is going to be another tough one. But we’re used to this now. This is a resilient sector that thrives on finding optimism, seeking out opportunities, and building for the future. Keep going. 

It was once said that 'a crisis is a terrible thing to waste', and whilst there are green shoots of recovery and optimism, this will no doubt be another bumpy old ride for agencies and clients. Picking through the headlines though, we can see a new era of marketing emerging.  

With the uptick in event spending, expected investment in social video to rise, and a holding up of traditional ad media, the brands set to thrive will be those that can hit that sweet spot of broadcast versus deep engagement in the passions of the communities they serve. Our human desire to get together, to be entertained, to be given peeks into the lives of others, should provide ample opportunity for those brands brave enough to engage with culture on a deeper level, supported with traditional media air cover.

It is refreshing to hear that despite the economic challenges marketers are starting to take a long-term view on investment which is good for all media, especially those that are proven brand building channels such as OOH. We experienced good growth in 2023 and expect that trajectory to continue, particularly with 2024 seeing a number of huge in-person experiences such as the Olympics and the Euro’s, which will only encourage investment in the medium.