IPA Bellwether Report Q1 2021: Positive Sentiment Returns


The IPA Bellwether Report Q1 2021, released today 15th April 2021, has revealed a net balance of 11.5% of UK marketers reporting a contraction in available adspend, down from 24.0% last quarter. Confidence is returning to the market, with a net balance of firms expressing optimism over the coming three months up to 26.2%, the most positive measure of sentiment since the close of 2015 from 5.8%.

Report highlights

- Concerns over the ongoing coronavirus pandemic, as well as indirect effects of the disruption on the wider economy, continue to be the main limiting factor for future marketing budget growth.
- Events-based marketing saw the widest budget constraints over the previous three months, with a net balance of 43.2% of firms reporting a contraction in budgets, followed by market research (-17.8%) and sales promotions (-16.2%), however the rate of these declines fell across each of these sectors.
- Video ad spend returned to growth, with budgets increasing by 3.3% compared to a decline of 3.5% last quarter.
- Recovery of UK market as a result of the ongoing vaccine rollout and the relaxation of government-mandated restrictions is likely to fuel further recovery of ad spend in coming months, though risks remain in terms of viral variants and the comparatively slow vaccine rollout in continental Europe.

Digital transformation key for catch-up

Azlan Raj

After a year of ongoing restrictions and record reductions in budgets, it’s encouraging to see further signs of outlook brightening for the industry. While it comes as no surprise that advertising and media remain in a difficult place after such a tough year, lockdown easing coupled with the widespread vaccine rollout are cause for growing consumer confidence and cautious optimism from brands keen to re-engage.

If marketers have learned anything in the last 12 months, it’s the need for adaptability and cultivating a healthy appetite for change at speed and scale. Those companies that had already embraced digital transformation were well placed to meet their customers’ experience demands. Unfortunately, those who hadn’t already taken the necessary steps to swiftly enable more personal experiences with agility, have fallen far behind. With the market forecast to recover into the next financial year – there’s now a pressing imperative for those businesses to play catch-up, which must start with value-driven investments in data and technology to tackle whatever uncertainties may lay ahead.

Azlan Raj, Chief Marketing Officer EMEA, Merkle

Return to the outdoors

We hope that these will be the last figures to be so heavily affected by the pandemic. If so, there's a lot for marketers to be excited about. OOH has suffered through the cold snap of the winter lockdown, but with the public now allowed out and a return to normal within our grasp given the vaccine roll-out, we’re seeing active recovery and a kickstart to demand. Our own research shows we're set for a real surge in consumer activity this Spring (perhaps best reflected by consumers braving the snow for a pint and queueing for hours outside shops from April 12th).

The renewed zest and vigour for all things outdoors will advance as restrictions ease, the weather improves, and we remember the collective activities that make us happy. OOH as a medium is well placed to encourage and enable that sense of community spirit - and reach consumers in a localised, but scalable way. OOH didn't waste the quiet months and we can now pinpoint audiences through useful data and respond with tailored messaging in near real-time. As the world goes cookie-less and life is lived outside again, OOH will experience strong growth with the return of budgets and audiences.

Ali MacCallum, CEO UK, Kinetic Worldwide

Human stories and agility

It’s hugely encouraging to see cuts to marketing budgets easing as we make our way through 2021. With less uncertainty expected in the macro environment, brands can begin exploring the consumer landscape as the economy opens up, so we expect to see a gradual improvement in ad spend throughout the year.

One of the things that stood out during the pandemic is the public hunger for stories on how ordinary people have overcome adversity in these trying times. Whether it’s Captain Tom, our NHS and key worker heroes or local volunteer networks, it’s the human stories that have cut through and brought the country together. Brands should continue to share these stories and show what they are doing to support the country as we emerge from the pandemic. It’s the human stories that connect most with consumers during times of difficulty.

As coronavirus restrictions begin to lift, consumers will also be looking for excuses to spend. Brands need to be agile in order to flex strategy quickly and meet expanding demand, making sure their messaging is aligned with the current climate at all times. Brands should use the new environment to engage emotionally with their audiences, on a human level.

Karin Seymour, Client Strategy Director, News UK

Prepared for lockdown scenarios

Justin TaylorThe IPA Bellwether report reflects the cautious optimism that we have all felt this week. The fact that the first stage of the government’s plans has stuck to timings has buoyed the mood of the public, and we’ve seen hairdressers, retailers and hospitality venues all benefiting from that footfall. We’re confident that trend will continue.

However, this confidence in ad spend is also due to the fact that businesses are now better prepared than ever for lockdown scenarios. So if the rest of the government rollout is delayed, e-commerce, home delivery and virtual events will continue to grow and thrive. Brands have found new forms of creativity, engagement and planning to drive growth - whatever the scenario - so it makes sense that media spend is looking bright.

It’s also great to see online budgets stabilising, with video returning to growth, showcasing its unfailing ability to drive consumer sentiment through medium to long term branding.

Justin Taylor, Managing Director UK, Teads

Marketers have had an opportunity to assess and refine their strategies

With a torrid year behind us and major infrastructural changes imminent, now is a great opportunity for a wholesale reset. In such challenging circumstances, the smartest marketers adapt to fit new paradigms. Many will be reassessing their strategies, overhauling their marketing plans in a bid to ensure they’re getting the very best results for their investment, and so the climate presented before us offers up a chance to go into the post-pandemic world perhaps stronger and with a renewed focus.

It’s positive that marketing budgets’ declines have levelled out, but the fact remains that marketers will have to work harder to net similar results to previous years. The global imperative will be for brands to reach consumers in more effective ways than ever before to remain competitive and current. It will be the seemingly small touches that make all the difference in converting people from browsing to buying, and in online advertising, with all the new rich, tech advancements in creative potential such as AR and video, such opportunities are surely there for the taking.

Dan Jones, Commercial Director, Cavai

Hope remains that UK ad tech will emerge from the pandemic stronger

Coming as the UK sits on the cusp of a more positive outlook, the latest IPA report will likely bolster the ad industry’s cautious optimism. After 12 months of setbacks, we’re hoping that the UK’s roadmap out of lockdown plays out as planned and allows some of the sectors that have been the hardest hit to start seeing growth.

During a debate hosted by the UK’s Parliamentary Forum for Media and Marketing this week, key industry figures discussed whether “The pandemic has been good for marketing”. While both sides made strong points, with the positives including e-commerce growth, a sense of marketing with meaning for society, and overall rapid responses when adapting to changing consumer needs, negatives highlighted include the sudden drop in budgets, redundancies and the stifling of a broad range of marketing formats.

The UK has a strong heritage of originality and creativity within brand advertising, and economic downturns have traditionally acted as a springboard for innovation. Whilst growth has in some areas, other marketers are raring to go and help rebuild confidence in their sectors; the IAA will support them however we can to ensure that we continue to have a varied and rich marketing landscape here.

Kirsty Giordani, Executive Director, IAA UK

The year of expansion

The stabilisation of marketing and ad spend this quarter points positively towards 2021 being earmarked as a year of expansion as industries reopen following the lockdown.

However, it’s important to remember that it’s not only the pandemic that has impacted the industry in recent times; new privacy regulations continue to be implemented globally, the countdown to cookieless ticks on and Apple’s ATT’s framework is scheduled to materialise imminently.

As a result, many marketers have migrated their strategies towards a more sustainable set of technologies. It’s no secret that third-party cookies are an imperfect solution, and marketers have used this period of upheaval to embrace the opportunity to transform the way they approach digital advertising once and for all.

Sustainable solutions emphasise building first-party relationships with consumers—an ecosystem whereby consumers authenticate in exchange for trusted and valued engagements.. Ultimately, marketers want to reach consumers based on authenticated identity attributes — supplied actively and with permission — which enables greater addressable reach, improved measurement, and better ROI.

Tim Geenen, Managing Director, Addressability Europe, LiveRamp

Brands will do well to stay in-step with their consumers' feelings

Florian Gramshammer

There is no doubt the past year has changed every aspect of our lives, both personal and professional. Consumer behaviour has changed and marketers have been quick to respond to that, but there remains so much uncertainty around the future. How many of our new habits will stay, how many will be dropped in favour of past preferences, and to what extent will we adopt a hybrid way of consuming media?

It’s reassuring to see the decline in budgets continue to slow and business leaders’ confidence growing - even as we emerge from lockdown, digital continues to be a more important battleground than ever and digital spend reflects that. Just as brands changed their messaging to fit the mood of the nation back in 2020, they must now continue to revise their tone of voice to ensure it is up-to-date and reflects consumer attitudes. Choosing how and where they communicate will be imperative as the public finds its feet with the ending of lockdown. 

We will certainly see some advertising platforms come back into the spotlight, and others lose a slight share of focus as behaviours change, but on the whole things should only continue to improve.

Florian Gramshammer, MD EMEA, Impact

Investing in marketing will be fundamental to winning (and keeping) new customers

It should not come as a surprise that brands have remained cautious in the first quarter of 2021; the ongoing pandemic, a nation in lockdown, and the logistical tailwinds of Brexit continue to hinder marketer’s efforts. However, there is a strong sense of optimism and positivity for the forthcoming quarters, notably in Q3. The vaccine rollout combined with the easing of lockdown and the demand from consumers to return to a level of normality will further encourage confidence in media investment across the marketing categories.  

To win back the consumers who have adapted to an online environment, many businesses will need to make their media budgets work harder, particularly in sectors that were forced to close, namely retail, entertainment, and hospitality. By the same token, however, online environments will also need to invest heavily in retaining those newfound customers.  

While there are factors that could derail the anticipated growth, such as new strains of the virus or delays in vaccines across countries, there are certainly reasons to be cheerful for now.

Lisa Menaldo, Co-Founder, The Advisory Collective

Adaptation to consumer behaviours

With the help of governmental measures to contain the pandemic, the market has stabilised quickly in 2020. The unparalleled progress in vaccination will now ensure that the industry can flourish again. What will remain are changing consumer behaviours that advertisers need to adapt to and address wisely.

Christoph Herwig, VP Marketing, Adsquare


Video set to surge

As the world inches towards normality, video has retained its position as the growth engine of the advertising ecosystem. Not only was video one of the least impacted formats in Q4 2020, recording just -3.5% reduction in ad spend, but in Q1 2021, it was the sole category to bounce back – where a net balance of +3.3% of firms recorded an increase in available spend compared to three months ago.

Consumers are turning to video platforms as their preferred content destination of choice, with YouTube, Facebook and TikTok dominating consumer attention and audience growth. As more marketers shift their traditional media budgets to these platforms, it is imperative they ensure ads are placed adjacent to videos in brand suitable and responsible environments with transparency and context top of mind. As this contextual capability improves, the growth of video platforms is set to get stronger.

Ross Nicol, VP, EMEA, Zefr

Digital video is well-placed to gain from the recovery

Jenny KirbySeen within the context of continued COVID-19 restrictions, there are some promising signs of confidence coming out of the latest IPA Bellwether ad spend findings. For example, the digital advertising category has remained stable since the last quarter, while video investment at +3.3% has seen its strongest improvement within the past year.

It shouldn’t come as a shock that digital and video categories are strong performers. The pandemic acted as an accelerator for increasingly digital entertainment consumption habits. Higher investment in areas such as over-the-top video (OTT) reflect these behaviour changes, but also the attractiveness of advanced targeting capabilities, cross-device measurement and programmatic buying methods available with OTT inventory. The ability to better reach audiences, accurately measure the impact of creative, and ultimately achieve desired business outcomes mean digital channels such as OTT are well-placed to gain as the recovery gathers pace through 2021.

Jenny Kirby, Managing Partner, GroupM

CTV opportunities unclaimed by marketers

Consumption of video content across devices is rising rapidly, particularly within connected TV (CTV) environments. With 19.0% of survey participants reporting elevated digital video budgets, the first marked increase in the segment since Q1 2020, it is clear there is an associated growth in CTV opportunities available to advertisers.

Yet, reservations around the transparency of the video ecosystem across CTV continues to hinder its adoption into marketers’ media mix. Streaming providers have found it nearly impossible to utilise video level data at scale for buyers to optimise programmatic ad investment and as a result this data is scattered and siloed.

To ensure video ad spend carries on its strong growth trajectory, marketers must learn how to securely onboard video-level data and connect it with the programmatic advertising ecosystem, albeit in a neutral, privacy-first way.

Bill Swanson, EMEA Strategy Lead, IRIS.TV

A lasting shift in consumer needs

Most businesses had to be reactive through the turmoil in 2020, but now is a pivotal time to shift focus to winning the battle for consumer spending, as both COVID-19 restrictions
and budget cuts begin to ease.

Our recent research into post-lockdown purchasing power found that Brits have amassed over £245 billion in savings since the pandemic began, 25% of which will be spent immediately or soon after lockdown ends. While holidays and trips to pubs and restaurants are top of the list (53% and 42% respectively), consumers will continue to spend on the items that saw popularity during lockdown, including home decoration (11%), garden products (10%), and personal and home technology (10% and 9% respectively).

These findings highlight how the pandemic has caused a lasting shift in consumers’ wants and needs, meaning marketers must think carefully about how they connect with audiences if they wish to stay ahead of their competitors. Partnering with established media brands will be a vital strategy to achieving this; with a combination of high-intent audiences, quality content and customer loyalty, they provide a potential for ROI that should put them at the top of every marketers tick list in 2021.

Zack Sullivan, UK CRO, Future Plc

Connect in-person and online experiences

The IPA’s latest Bellwether report is an accurate reflection of what we are seeing as an agency - cuts to UK marketing budgets have eased and consumers are longing for the unique interactive experiences to which they have become accustomed during lockdown. As restrictions lift, it’s clear that marketers must find innovative ways to link digital and physical experiences to bring added value to consumers.

While apps and AI technologies are great for online targeting, they also present the opportunity to build relationships with consumers that are out and about post-lockdown. Looking ahead, the winners will be the value-adding brands who can adapt to offer ‘phygital’ experiences, utilising first-party data to connect both in-person and online experiences. This will become even more important with sun setting on third-party cookies this year.

Faye Daffarn, Managing Director, UK, Tug

Granularity in programmatic and contextual advertising

Nick Morley, IASAs the UK eases out of lockdown restrictions, and confidence increases, marketers will remain focused on ways to efficiently spend budgets and maximise ROI. By utilising granular data points, advertisers can understand performance, drive engagement, and achieve valuable business outcomes.

Looking ahead, we can expect to see more marketers make investments in programmatic and contextual advertising. Using first-party data is not only more cost efficient and scalable than third-party audience tracking data, such as cookies, but will also address data privacy concerns. Those that make investments now will reap the long-term benefits, particularly when considering that the majority (70%) of UK consumers say that their perception of an online ad is impacted by the surrounding content on the page.

Nick Morley, EMEA Managing Director, Integral Ad Science (IAS)

Boosted by lockdown, gaming has earned a permanent place at the table

Even in an online gaming sector that has, for better or worse, been a beneficiary of lockdown and remains poised for a lot more growth, news of slowing marketing budget cuts and the promise of growth is very positive. I‘m sure some of the money that has drained out of outdoor advertising and other categories has found its way into digital experiences, including virtual outdoor ads of the type that we supply within games. But in-game advertising deserves a place within the broader advertising ecosystem, and in rebound times we look forward to seeing it making its case ever more strongly - not as a virtual substitute for anything else, but as a unique medium with a massive audience.

Tobias Knutsson, CEO, Adverty

Education needed on identity

Whilst budget plans for the year ahead point to a recovery, marketers will need to prove their hard-won spend is working. This will require a data strategy that enables them to understand, find, and accurately target and message their customers without using third-party cookies. Identity can solve this challenge but education is needed on how identity (probabilistic and deterministic) and non-identity (context, FLoC) solutions can work together. Importantly, marketers are clear that they need multiple identity solutions which are interoperable, so we can expect to see them seeking collaborations across the industry that will enable them to build up their data supply with other first-party data and high-quality third-party data.

Alison Harding, VP Data Solutions EMEA, Lotame

Rise of agile and data-driven OOH

It should come as no surprise that UK OOH spend declined quarter on quarter – lockdown 2020 only started in March and by then, spend for the quarter had already been committed. A net balance of -24%, up from Q4 2020, while still in lockdown is testament to the excellent work of the UK OOH industry by specialists and media owners. Advancements in mobile and traffic data, audience planning dashboards, and media owner audience guarantees have boosted confidence in the channel. Digital OOH has remained strong during this period with clients embracing the flexibility offered by connected screens in key areas like supermarkets, where footfall is high.

Looking forward, OOH is a strong component in client pipelines as the reopening of retail, gyms and pubs is driving a huge increase in shopping, travel and transport. Audiences will continue to increase as the successful vaccination programme allows the UK to recover. The OOH environment that brands have returned to is more agile and more data-driven than before. It’s also an environment now capable of delivering programmatic DOOH via connected screens, utilising real time mobile location data, creating new and exciting opportunities for the ecosystem.

Nigel Clarkson, Chief Revenue Officer, Hivestack

Digitisation has forever changed how brands and consumers communicate

The global lockdown has accelerated the shift to digital in three main areas: streaming (video and audio), gaming, and ecommerce. This is providing advertisers with emerging channels through which they can reach their target audiences. Whilst we expect there to be a resurgence in offline purchasing and advertising as the world opens up, consumer habits under the ‘new normal’ will result in irreversible and transformational changes in the way advertisers communicate with their customers.

A key piece that has been overlooked by many commentators is the shift from in-store marketing to online. Advertising within ecommerce platforms like Amazon, Instacart, Ebay, Zalando, etc. is exploding and will be the beneficiary of billions of pounds in ad spend as brands look to increase their conversion at the bottom of the funnel and drive more sales. We see this as one of the biggest opportunities in the next 5 years.

Rich Ashton, Managing Partner, FirstPartyCapital

Niche digital ad formats could be the answer to post-pandemic financial limitations

The easing of pandemic-powered cuts to marketing budgets is positive, but the speed of this easing indicates that the industry still feels apprehensive. Many businesses still have some way to go to recover from the past year, making a slow return to normal understandable. 

However, budget cuts shouldn’t necessarily correlate with cuts in impact or efficacy. Digital marketing in particular offers all manner of effective advertising formats that don't require huge investment, yet are incredibly powerful. Brands looking to boost their marketing within new financial constraints would do well to explore more niche digital formats that cut through the clutter and command attention. 

Some sectors have fared better than others over the past year, but we should be mindful of the bigger picture and ensure we are pulling together as an industry. While I am very optimistic about Q2 and the rest of 2021, and expect a faster return to 2019 levels than some commentators, it’s important to remember that our future success depends on maintaining and supporting a diverse industry. Our combined skills will help drive us forward stronger and healthier, ensuring we come out of this terrible year in the right frame of mind to fight back together.

Julia Burton Brown, Commercial Director, Inskin Media

Consumers will be keen to begin experiencing life again

Mark InskipIt’s been a tough year for businesses but there are spring shoots of hope coming through. While COVID-19 has hit some British households’ finances hard, others have managed to save during the pandemic and people will be looking forward to doing the things they love again as restrictions ease. Consumers with cash in their pockets will have a choice of where to spend it and are likely to be more discerning.  Understanding what they will prioritise first will be vital for brands to capture a slice of that spend and to hitting the right note with their advertising, making sure it cuts through.

Mark Inskip, Chief Executive UK and Ireland, Kantar

Integrating data and creative into a collaborative approach will be key

The latest IPA Bellwether Report indicates that business conditions are beginning to stabilise after considerable turmoil - with almost 15% of businesses surveyed actually recording an increase in available ad spend.

This is, of course, welcome news. It’s critical, however, that media and marketing plans are creative, collaborative and data-led. With online spend stabilising and video, in particular, returning to growth, integrated strategies are key when it comes to maximising ROI and smashing KPIs.

What’s more, as the nation comes out of lockdown and life regains some so-called ‘normality’, consumers will be actively seeking out new products, experiences and entertainment - for which it will be more important than ever for companies to build and rebuild their brand awareness. Long-term business success has always required agile, scalable marketing plans which deliver results in a fast-moving, fragmented digital landscape. Today, this is true more than ever. Fortunately, technology, data modelling and machine learning, can  all help to drive accuracy when it comes to finding new customers, speaking to them in relevant ways and learning from interactions to maximise performance.

The industry needs marketing experts, engineers and data scientists like never before to capitalise on the opportunities in this volatile marketplace.

Simon Barnes, COO, TMWI

Creativity will be crucial to making an impression

Confidence is indeed starting to return but if there’s one thing we’ve learnt, it’s that change is inevitable. In this rapidly evolving world, digital advertising needs to leverage data and creativity for maximum impact in order to help businesses communicate, survive, and thrive.

And, as all parties in the media ecosystem rightly demand greater value, transparency, and control, creativity is paramount. Marketers cannot rely on tools alone. We need to work together to solve business problems, remove complexity and move forward.

Creativity is the biggest driver of sales for advertisers – arguably today more than ever. While many digital marketing tools have historically been reduced to tactical performance channels, they can do so much more. The opportunity to blend into premium content and experiences across a number of channels makes it an exciting time to be in marketing.

It should also come as no surprise to learn that engaging experiences for consumers deliver accelerated returns. With consumers having spent more time in front of screens than ever before, ad executions that cut through are critical. In this way we can win the confidence of consumers as we exit lockdown and look forward to more positive times ahead.

Steph Miller, Commercial Director, UK, Adnami