Is advertising’s optimism matched with real prospects of growth?
Despite starting this year in lockdown, there is a collective sense of optimism about the future, resulting from the great progress made with the Covid-19 vaccination programme. This sense of optimism was clearly reflected in the findings of the latest IPA Bellwether report.
A significant 18.1% of the marketers surveyed said they were more confident about the financial prospects for their company than three months ago. This is the biggest quarter-on-quarter increase for five years.
However, this optimism is not borne out in the ad spend figures. Advertising budgets declined again in the last quarter of 2020, with 40.4% of companies surveyed reporting a decrease in budget for marketing. This resulted in an overall 24.% drop in available marketing budget, with firms reporting that they didn’t expect upward revision until the next financial year.
While the UK advertising marketing is going to pick up – and we are right to be optimistic – there is a year of hard work ahead of us and we need to be very focused on identifying and realising potential opportunities.
All businesses within advertising and marketing will have concerns that they will need to attend to over the course of this year, but as an industry there are a few key issues that we will have to address.
Arguably the biggest technical issue will be changes in online tracking. Apple and Firefox have already made their moves with default blocking of third party cookies. The focus is now on Google and what will happen with Chrome and their privacy updates. It’s likely that measures through their Privacy Sandbox will be less severe than Apple and Firefox, but questions are being raised about whether the changes could undermine publisher revenues and further strengthen Google’s grip on the market. The UK’s new competition watchdog will investigate, but whatever the outcome, the industry will need to plan for fewer recognisable and trackable people.
Undoubtedly, the largest human and operational issue will be the end of the furlough scheme in April. This is going to be tough for all industries, but if advertising is going to recover quickly, it is going to need to do all it can to retain – and attract – talent. Planning for the future and avoiding short-termism will be critical. Unfortunately, we will see more redundancies – and people switching careers – but I believe we will also see more start-ups and new companies bringing more innovation to the market.
From a service point of view, agencies and media owners alike are going to have to assess whether they have genuine relevance for marketers in a post-Covid world. Right now, many major brands are calling pitches and this is focusing attention on what marketers really need. Yes, all advertisers want greater value for money, but other issues are at play here. The pandemic has highlighted the need for speed and agility, for smart use of data and technology, and for adapting to changing consumer behaviour in terms of shopping, media and entertainment. These issues are going to test the industry over the coming months.
And while we still have more pain to get through, this changing marketplace will bring new opportunities for advertisers. Out of home is likely to make the strongest recovery of all the media channels. Footfall in most OOH environments is set to bounce back almost immediately after restrictions are lifted. The channel is not just an important platform for brand building, but also a key source of digital innovation. And remember, when restrictions are lifted, OOH will be the only broadcast channel that will be able to identify pre-Covid audiences and target them offline.
As we emerge from the pandemic, we are likely to see other changes and opportunities in advertising. Mobile and mobile data will become more important than ever in 2021, as we all move around in less predictable ways. Mobile will help bricks & mortar retailers to attract shoppers wherever they are – regional, local or hyper local – acting as the final point-of-sale performance channel. In this way, mobile will help drive footfall and re-establish high street businesses. In the new world of ‘approximate location targeting’ and changes to online tracking, mobile will continue to offer advertisers the ability to laser in on potential customers through first party data.
Smart use of data is going to be a key feature of post-Covid growth. And not just for the larger advertisers. I believe that many smaller advertisers with modest budgets are going to increasingly reap the rewards of investing in addressable media and hyper-local targeting. SMEs are already the largest cohort of advertisers on Facebook and Google, and more are set to embrace TV, as the likes of Sky’s AdSmart and ITV’s Planet V make localised, targeted TV more affordable. As we move out of lockdown, addressable media – including OOH and radio – will enable smaller advertisers to navigate the changing movements of people as they spend more time out of their homes. And it will enable them to spend money on advertising in the confidence that is connecting them with the right people in the most cost-effective and measurable way.
And, finally, while we see ever greater opportunities created by technology and smart use of data, I believe we will also see a greater emphasis placed on traditional brand building. For the past couple of years, the industry has heaped praise on the online up-start DTC brands. But some of these online brands are now hitting a growth ceiling and, following in the footsteps of online brands such as Just Eat, they will need to invest in traditional brand building to drive growth through scale-up and beyond. The opportunity will be to combine direct response advertising with brand building on the likes of addressable TV and out of home.
Advertising is a very resilient industry and so marketers are right to be optimistic about the future. But nobody should be in any doubt that the 2021 is going to be another very difficult year. There are tough questions that all of us are going to have to address and we will need to hold our nerve when dealing with short term problems. But many opportunities will emerge from this changing marketplace.
David Price, Managing Director, The Grove Media
This article was published in BrandChief on the 8th February 2021, article link below
https://www.brandchiefmag.com/post/is-advertising-s-optimism-matched-with-real-prospects-of-growth
Picture reproduced by kind permission of Ravi Roshan @ Unsplash
