IPA Bellwether Q3 23: Total Marketing Budget Growth Slows, Main Media Spend Rises

The latest IPA Bellwether report has shown a strong rise in main media spend, but growth in total budgets has continued to slow. What does the industry make of the Q3 results?

The latest IPA Bellwether survey shows the tenth successive quarter of growth in total marketing budget growth, however the positivity is tempered by the fact that rate of growth has slowed.

Once again the report is a tale of caution across the industry – economic outlook, the cost of borrowing and inflationary pressures have led marketers to tread carefully with their spend. Overall 21% of firms have increased their outlay, while 15.8% have registered a downgrade in their budgets.

Main media spend has seen its biggest rise since Q1 21, and events and video spending have grown. PR spend saw its first rise in five quarters, while audio and OOH have dropped off slightly since the last quarter.

“Instead of seeing a re-run of last quarter’s slightly concerning results where companies revised up their short-term sales promotional activity to record amounts while reducing their main media spend, this time we are buoyed to see a more considered, reverse state of affairs.”

Paul Bainsfair, IPA Director General

So, what does the industry make of the latest IPA Bellwether report? We asked a selection of ad leaders to give their thoughts:

Proactive publishers will prevail

The recent IPA Bellwether report highlights potential bright spots in the advertising landscape, even with revealing concerns about ad spending through 2024. This dynamic landscape emphasises the ever-growing importance of publishers embracing unified, state-of-the-art tools and ability to become really data-driven companies. By staying proactive in monetisation strategies, leaning into comprehensive tools to create content, and optimising ad revenue pathways, publishers are well-positioned to stay ahead of the curve in monetisation and face any challenges.

Asmaâ Bentahar, chief marketing officer, Pubstack

There are notes of optimism

Based on the latest Bellwether report, concerns about inflation, the cost-of-living crisis and consumer spending are clearly not going away overnight. That said, there are also notes of optimism – for example, in Q3 overall budgets were revised up for video, published brands and ‘other online advertising’ as many brands surveyed see advertising as a necessary investment to maintain or grow market share against a tough economic backdrop.

It’s also worth noting in several of the responses a marked optimism around how AI and other innovations in marketing are already giving some brands the edge. There is the feeling that – especially given the present challenges – those who get it right now stand to gain even more in 12 months’ time.

Niall Moody, CRO, Nano Interactive

Brands are willing to make capital investment again

The shift from the heavy-promotions push of the last IPA Bellwether to a refocus on brand building and main media budgets in the latest report certainly signals a more positive outlook for UK advertisers. While the economy remains unpredictable, this increase indicates that once again brands are willing to make capital investment, rather than capital expenditure. 

Elsewhere, it’s unsurprising to see that AI is at the forefront of the minds of many marketers. As brands look towards driving efficiencies as economic pressures ease, these tools could be vital. It’s a definite positive that AI is being seen as a way to increase productivity rather than a destroyer of jobs.

Paul Thompson, country manager, Seedtag

In times of turbulence, brands must have their finger on the pulse

Consumers tend to turn towards better value products and consumption of video content during hard economic times. Streaming media services have already recognised this with the great success of the ad-tiered subscription model, in turn, creating more inventory and opportunities for advertisers to engage with an active audience.

As expected, ad-spend on sales promotions dropped which is usual during the summer period. However, looking into next quarter we expect this to rapidly increase for Christmas.

This short-term focus will drive end of year revenue, but we’re advising clients to consider more long-term engagement strategies as this will not only help with brand awareness but also deliver a sustainable return on ad spend in the face of the suspected recession. In a turbulent time, brands need to have their fingers on the pulse and react accordingly. More deeper analysis of behavioural trends through a psychological lens can help to predict changes in consumer behaviour, this combined with the use of AI tools to understand sentiment and crunch large sets of analytical data will create support in delivering more impactful campaigns.

Celine Saturnino, COO, Total Media

There is a marked shift towards long-term brand building

Although marketers were still cautious in Q3, I’m encouraged to see a shift towards longer-term brand building, and the use of video and published brands as means to do so. We know that by placing quality, non-intrusive video ads at the heart of premium editorial environments, advertisers can achieve mass reach, awareness, engagement and attention for their brands – crucial in what remains a competitive consumer market.

Outside of channels, advertisers are facing a difficult balance of challenging economic market, shifting political priorities whilst starting to think, for the first time in a few years, about planning for the longer term. We're therefore hopeful that this will encourage a renewed focus on tried and trusted platforms that can deliver business outcomes and brand growth for the long term.

Justin Taylor, MD, Teads UK

We hope to see greater addressability

It’s great to see that main media budgets grew in the last quarter, as businesses appear to take a longer-term view on any economic uncertainty. The video sector continues to grow, and we hope to see greater addressability as the industry collaborates more closely. 

Success in the next quarter will mean getting the most out of those budgets, and there’s an increasing sense of optimism among those using innovative AI technologies to do this."

Sonia Pham, head of operations, illuma 

Marketers are responding to uncertainty with caution

Uncertainty causes marketers to become more conservative in their decisions. This trend is present in other markets, where the growth is below expectations and/or below the inflation. Buyers interested in building strong brand recognition try to work directly with publishers instead of using the open exchange, as it helps them to lower the fees while still being able to deliver on the expected goals in terms of viewability, CTR, and audience reach.

Krzysztof Lis, programmatic deals & consultancy expert, Yieldbird

CTV is driving video's growth

It's positive to see that video continues to mirror the general trend for long-term growth. Though the most recent IPA report shows only a small increase, the channel’s resilience is driven in no small part by the continuing growth and maturation of CTV. Audiences continue to make CTV a part of their content-watching routine, and with the expansion of ad-supported streaming tier free ad supported streaming television (FAST), there are an increasing number of ways that advertisers can grab their attention. This direct and immersive way to connect with audiences is made even more powerful by its targeting and measurement capabilities, ensuring marketers not only captivate their target audience, but also optimise their campaigns.

Edward Wale, VP, Europe, LG Ad Solutions