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IPA's latest Bellwether report points to "tentative" economic recovery
Date: 14/07/2009
The UK's Institute of Practitioners in Advertising (IPA) has released their quarterly Bellwether Report Q2 2009 which compares the latest UK ad spend data with economic indicators such as PMI, GDP, corporate profitability, interest rates and the performance of media stocks.
The report shows that digital marketing budgets were revised down by 7.9 per cent in the second quarter of 2009. Internet advertising experienced a more modest downward revision compared to media, which was hit hard, falling 18.4 per cent. Search marketing proved most resilient out of all marketing sectors, falling by only 5.4 per cent.
A summary of further implications for marketers is below:
1) It's not all good news
The first thing is that a decline, whether accelerating or decelerating, is still a decline. To use just a flattening curve to call the ‘green shoots' of economic recovery is premature. Whilst it might be true that this is the beginning of better times, there's simply nothing in the report to say that this is necessarily the case. There has been much talk in recent months of U, V or W shaped recessions and there's not much new that enables us to say that this is a recovery or simply a blip in an ongoing downwards spiral.
2) A pivotal moment for digital?
The second question that arises is whether this is a tipping point for digital media versus traditional. The drop off for offline advertising over the last few quarters has been vertiginous, whilst that of digital has been less so. The implied convergence that these trends suggest indicates that this might be the time that digital becomes truly mainstream - that this is the point at which it starts challenging for really significant percentages of overall spend. As with so much, it's probably too early to call, but it's without doubt an interesting and exciting time for those of us on the digital side of the divide.
3) The state of search
The third area of interest is search marketing. There has been much comment around this report (and in its previous iteration) about search's resilience to the decline, even though some have detected an increased rate of decline in this quarter's figures.
There are two things we can take from this. Firstly, the unsurprising fact that directly measurable, targeted and ROI-generating marketing tools do comparatively well in a downturn. Secondly, that search is seasonal. Yes, there has been an increase in the rate of decline in search spend this quarter but this is what you'd expect at this time of year.
The travel sector is a significant player in the search market, and its spend is always heavily weighted towards Q1. This year we've noticed that the peak came later than usual, but it was still there and its contributed towards the apparent decline in search's fortunes. If you look at other sectors, notable retail and particularly clothing retail, we've seen relatively spectacular year-on-year growth in search spend.
4) Is digital spend shifting?
The fourth point to address in this report is whether it can tell us anything about how brands are balancing their internet spend. Are they, as some would suggest, backing display as the new growth area or are they, in fact, looking towards the benefits of what appear to be good CPCs to be generated from natural search? Our experience across clients would appear to support the latter view, but others have taken the same data to indicate the contrary.
5) What about social media?
Fifthly and finally, it's most important to recognise the limitations of this report. Yes, it does a fantastic job of measuring advertising spend, but one of the key areas of growth in the last few quarters has been below-the-line promotion, driven primarily by a massive focus on social media engagement.
Increasingly we and other agencies are seeing large proportions of online spend being dedicated to non-advertising projects in the social space, which are unlikely to be captured by these metrics. In fact, a good proportion of this investment has gone into supporting paid media, often by boosting search visibility, but any transfer of spend from advertising to social is unaccounted for by the IPA and thus potentially distorts the figures.
6) Is recovery on the cards?
Regardless of the above, it's probably a fair assumption to say that the market is picking up - this report seems to suggest that and, anecdotally, many seem to concur. However, what the report can't tell us is what the recovery will look like and who, if anyone, will be the winners and losers of what has unarguably been a difficult few quarters for the marketing industry as a whole.
Source: revolutionmagazine.com, IPA
WFA collates data on global ad spend and media trends to help members understand market conditions and communications investment around the world. For more information please contact Steve Lightfoot: [email protected]
