Jaywing PLC IPA Bellwether report

Jaywing PLC (LON:JWNG) reacts to latest IPA Bellwether report. 

 

The Q3 2017 IPA Bellwether report was released earlier in October.  The quarterly report’s authors survey a panel of around 300 marketing professionals to provide key indicators of the health of the economy and marketing industry, analysing marketing spend and commenting on key economic indicators. 

 

In summary while marketing budgets have risen again in Q3 of 2017 to provide a five-year period of budget growth, they have not risen as strongly as they have previously since the financial crisis.  The net balance of UK companies revising marketing budgets up is at +9.9% but we are seeing stagnation in a number of companies (70% at the same level as three months ago) and channels (main media advertising, sales promotion, direct marketing) and decreases in optimism about the industry and only a small increase in optimism about their own company’s financial prospects up a little following Q2’s at an 18-quarter low. 

 

Uncertainty around the impact of Brexit was the key driver, along with reports of reduced sales and investment and a desire to keep costs lean. 

 

Since the publication of the report, the UK economy figures have shown some slight growth for the quarter (+0.4%), with industries such as computer programming, retail and service sectors showing the strongest growth. This is ahead of the expectations of many economists, including the report’s authors, which had set it at 0.3%. Ad spend was expected to see growth of 0.6% in 2017 and no growth in 2018 before recovering in 2019 and 2020 at 1.8% and 2.3% respectively.

 

In Q3, budgets were reported as follows:

·      marketing budgets overall +9.9% (Q2 +13.1%)

·      internet +17.0% (Q2 +22.7%)

o  search/SEO +16.3% (Q2 +15.6%)

o  mobile advertising +5.8%,(Q2 +3.0%)

·      events +9.4% (Q2 +2.1%)

·      PR +7.2% (Q2 +2.1%)

·      ‘other’ +2.3% (Q2 -2.6%)

·      main media advertising 0.0% (Q2 +9.8%)

·      sales promotion 0.0% (Q2 -10.7%)

·      direct marketing 0.0% (Q2 -4.7%)

·      market research -2.4% (Q2: -6.2%)

 

Further, a recent parliamentary review cited “Voice” and voice activated systems as a key platform growth area, with the rise of products such as Amazon Alexa achieving commercial success. In the same report, AI and Autonomy were also cited as having a big impact in 2017, although this mainly focused on concerns around physical safety and insurance in a world of driverless cars.

 

In Econsultancy’s recent Top 100 Digital Agencies Report, where Jaywing ranked 21st in the UK and as the second largest agency outside of London, similar themes were coming through. In addition, the report identified key trends in: agency consolidation to fewer, bigger agency relationships across more services; digital transformation to enhance customer experience; Brexit, the US election, the economy and GDPR as key challenges; and AI and data science as key to finding time for creativity.

 

Commenting on the reports, Martin Boddy, Chairman, Jaywing plc, said, “The ongoing Brexit negotiations are not yet bringing any clarity to the uncertainty so it’s difficult to see an immediate upturn from the current stagnation of budgets on the horizon, however, there remains a degree of cautious optimism.  For example, while economic growth for the last quarter was still small, it may give rise to a revision of ad spend forecast in the next report as this is slightly against the authors’ expectations. 

“The good news is that spend on the ‘internet’ category rose well, if not as strongly as previously. Within that category, ‘search’ saw a revision to a seven-year-high with mobile and PR also doing better than the previous quarter.

“The rise of ‘voice’, as noted in the Parliamentary Review, will be a critical change in how marketers do marketing.  The role of brand is likely to be elevated beyond where it has been felt necessary so far in the digital age in order to compete amongst a much smaller set of search results.  That, along with artificial intelligence, is set to change the nature of marketing considerably and marketers will need to be able to bring brand and performance together. All of which is very much in-line with our propositional and operational strategic direction.

“The perceived advantages of cost and return of digital marketing were noted as key in driving budget growth in this area, although we would also not be surprised if things like digital transformation projects and GDPR were occupying some of those budgets.  Against a backdrop of technological complexity, it is essential for brands to use GDPR as an opportunity to reset their customer relationships, using data and machines to enhance and enrich their experiences, creating a fair exchange and avoiding the ‘pile it high, sell it cheap’ approach to digital marketing that has been seen in some places over the last decade.  Again, this very much requires a coming together of key technical and communications skills and ones we possess within Jaywing.

“Finally, digital transformation is attracting the big consultancies into businesses although they often don’t have the breadth of creative and practical marketing skills to bring to the table and agencies tend to lack the credibility to handle large-scale business and technical transformation programmes. For organisations able and wishing to be more nimble, Jaywing is well placed to assist such transformations.”

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