Researched and published by IHS Markit on the behalf of the Institute of Practitioners in Advertising, the Bellwether Report features original data drawn from a panel of around 300 UK marketing professionals.
Carefully selected to represent all key business sectors – and drawn primarily from the nation’s top 1000 companies – the report serves as a reliable temperature check on the marketing industry.
2020 may be a year like no other, but that doesn’t mean we’ve sunk into a vortex. Let’s start with a gentle positive.
Total marketing budgets continue to contract, but this is at a slower rate than in Q2.
In April to June of this year, many businesses were temporarily closed or working at a reduced capacity. With offices reopening and many staff returning from furlough, marketing budgets aren’t necessarily springing back to form – but the contrast is softening.
The latest Bellwether survey indicated that a net balance of -41.0% of panellists saw their marketing budgets cut in the third quarter (up from -50.7% in Q2).
In Q3, 52.6% of respondents recorded a decrease in budgets from three months ago, compared to 11.6% that saw an increase.
The reasons cited were much of what you would expect; businesses are still battling reduced revenues due to the pandemic, with a need to cut costs and resurrect profitability.
Even with numerous businesses opening their doors again, ongoing social distancing forces many to operate with a reduced capacity. As a result, they must still tighten their belt.
The influence of coronavirus has resulted in reduced ad spending across all monitored categories.
Events continue to face the hardest struggle. Just 3.8% of panellists saw an increase in available spend for events while 67.9% recorded a decline.
Direct marketing and main media advertising experienced the least aggressive budget cuts; a net balance of -25.3% of firms recorded a reduction in spend for both categories.
Sentiment towards industry-wide and own-company financial prospects are still somewhat pessimistic, but still manage to lean towards a sense of stability.
In regard to the year to come, there’s some sense of opportunity to be found – although they seem to hang alongside a haze of daunting threats.
The culprits are in plain sight. COVID-19 continues to press on, while the Brexit deadline is just around the corner. It doesn’t make for the most reassuring forecast; mostly because we simply don’t know the answers to our concerns.
Will coronavirus lead to further restrictions? We’ve seen some unwelcome ones in Q4 already. Meanwhile, the uncertainty of Brexit leads many to fear potential supply shortages and rising costs, such as a tariff on imported goods.
However, not all panellists are in despair over a looming change to the trade union.
Many are optimistic that the UK will find more favourable trade agreements with other countries, leading to less rigid restrictions and even some opportunities to cut costs and increase profitability.
The economic forecast suggests a decline in UK marketing budgets this year… but with the potential for a robust recovery in 2021.
The Q3 report predicts a -13.2% reduction in consumer spending and a -20.0% decline in business investment during 2020, paired with a -23.3% fall in adspending.
However, all is not lost; it’s also anticipated that businesses will continue to evolve and lean into the new landscape. In real terms, a +4.6% expansion in GDP and a +11.3% rise in adspending is foreseen for 2021, with steady growth coming hot on its heels.
Of course, these predictions hang on a swinging pendulum of variables.
We need the pandemic to come under more consistent control, alongside productive Brexit negotiations that work in our favour. These outcomes will influence the positive shift that we all hope is just around the corner.
We know that those who can invest in marketing during the downturn will reap rewards in both the short and longer term.
It’s a fact that’s well-researched by many.
Rollins, Nickell and Ennis (2011) concluded that: “companies who continue their marketing efforts during economic downturns tend to become post-recession winners.”
Meanwhile, Amissah and Money (2015) found that: “Researchers have shown that companies that are able to maintain and even increase their marketing budget/spend during a recession experience growth in their sales figures and market share during and after recession.”
After all, your customers are still out there – even if they’re a little quiet right now.
Increasing brand recognition when the market has lulled will strengthen your position.
With so many marketers choosing (or forced) to step back, even just maintaining your ad spend at a normal level will allow you speak louder than your competitors. It’s an opportunity worth paying attention to – and one that will likely not come back around in the same capacity.
Similarly, disruption to the norm gives you an unparalleled opportunity to get creative. Have you ever wanted to reposition your brand, or bring a new product to the mix?
It might seem like a barren landscape to some, but this is a unique opportunity to eye the crops that your competitors might be too distracted to see. Grab the opportunity with both hands – The time is now!
