IPA Bellwether Report shows muted ad spend ahead of GDPR: The Industry Reacts


Written by:

Chris Dobson

CEO, The Exchange Lab

Market budget growth lost further momentum during the first quarter of 2018, according to the IPA Bellwether report published last Wednesday (18 April). In fact, budgets are growing at the slowest rate since recordings began in 2016.

Report highlights:

  • Internet continues to perform best, but main media slips into contraction
  • Ad spend set to rise by just 0.8% in 2018
  • Muted ad spend growth predicted for 2018 and 2019

In line with the trend seen since the end of 2012, UK marketing budgets were increased further during the first quarter of 2018 as marketing executives helped launch new products, bolstered events marketing, and continued to enhance the role of digital platforms within their marketing strategies. This is according to the IPA’s Q1 2018 Bellwether Report released 18 April 2018.

However, latest data revealed that growth momentum was lost amid reports of challenging market conditions and financial pressures squeezing budgets. Underlying sales were reported in some instances to be a little softer, whilst investment funds were being directed away from marketing to other business areas.

The Q1 survey indicated that 22.9% of companies benefited from an increase in their marketing budgets during the latest survey period, compared to 17.9% of companies that recorded a fall. The resulting net balance of +5.0%, down from +8.6% in the previous quarter, was the lowest recorded by the survey for two years.

Encouraged by positive returns from previous digital marketing campaigns, panellists continued to step-up their adoption of internet advertising during the latest quarter. The Q1 survey results indicated that internet marketing spend was raised for a 35th successive quarter at the start of 2018, albeit at a slower rate.

Whilst once again the strongest of all Bellwether categories, the net balance of +8.7% was the lowest recorded by the survey since the end of 2015. Within this category, search/SEO expenditure also grew at a slower rate, with the net balance falling to +5.6% from +12.4% in Q4 2017. Meanwhile, there was a stagnation in mobile advertising observed, with an equal proportion of marketers revising their budgets up to those indicating a fall, resulting in a net balance of +0.0%, from +6.0% in Q4 2017. Spending in mobile failed to rise for the first time in a year and a half (+0.0%, from +6.0%).

ExchangeWire spoke to some of the online advertising industry’s top thought leaders about what the latest report means:

Data is king

Going forward, improved data measurement practices must be put in place, according to Martin Pavey, CMO, Flashtalking: In a challenging economic environment, it’s promising to see internet ad spend up for the 35th successive quarter. This stands in stark contrast to TV, radio, and cinema where spend fell into the negative. The shift in priorities reflects the accountability of online advertising “ in particular, the ease with which marketers are able to target ads to individuals online and measure ROI.

Whilst budgetary obstacles present a challenge for the industry as a whole, by using data to inform their strategies, advertisers can make the most out of more modest budgets. One way to do this is by harnessing technology to overcome the limitations of outdated modes of data-measurement practices to ensure they target their investment efficiently.

Chris Dobson, CEO, The Exchange Lab, agrees with this sentiment: The industry is in transition and, in these turbulent times, having an effective digital strategy is more imperative than ever. Brands need to be actively engaging and owning conversations with users across relevant digital channels if they want to make an impact.

Data is at the crux of this. As marketers come under increasing pressure to prove the effectiveness of their strategies, we expect to see the adoption of programmatic go up, as it systematically proves its worth and extracts value from the data. In turn, this will accelerate the normalisation of business models within the ad-tech ecosystem, and those who have only survived on high non-disclosed margins, and are yet to make profit, will find themselves under intensified pressure.

Written by:

Chris Dobson

CEO, The Exchange Lab

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