Did somebody say advertising is now a proven driver of growth? Why adspend has bucked Covid


The rapid bounceback of adspend following last year’s recession shows how advertising has become an indispensable tool for businesses, not just an economic bellwether.

When the world closed down in March of last year and a deep dark recession was forecast, it was difficult to look forward with any degree of positivity.

Those of us of a certain vintage cast their minds back to 2008 and the devastating impact the economic recession had upon our industry. Advertising was then the bellwether of the economy, and so it proved. Budgets were slashed and, despite the protests of the most ardent marketers, faith in advertising looked fair-weather.

Advertising investment was not, in the main, determined by its return on investment but by a percentage-of-sales model, or variants thereof. The less cars or chocolate you forecast to sell in a given year, the less you felt permitted to spend on advertising them.

“It’s an investment, not a cost” was the rallying cry from our industry. But the lack of widespread attribution modelling (or the lack of widespread faith in those results) coupled with the demand for instant impact created a sharp fall in advertising investment.

But fast-forward to 2021 and the situation appears markedly different. The resilience of media investment in the current economic downturn is in stark contrast with the dramatic decline felt during the 2008 recession.

Advertising Association/Warc data highlights a seven successive quarter decline before the UK advertising market began to recover in late 2009. In contrast the advertising spend decline in 2020 lasted just two quarters, and IPG’s Magna estimates UK ad spend will grow year-on-year by 17% in 2021.

So why the difference? 

One compelling hypothesis is that advertising is no longer either the economic bellwether or just an article of faith.

To be more precise, the last decade has seen a step change in advertising effectiveness and confidence in the way it is measured. Advertising and media is now a proven driver of growth and, as such, has increasingly become a protected investment rather than a discretionary cost.

We believe there are five prevailing contributing factors:  

The blurring of communications and commerce

Digital has, of course, transformed the effectiveness of media in many ways but the most significant is how seamless the transition from exposure to action has become. The collision of commerce and communications has elevated media from pure creative canvas to critical source of business growth and contextual expression of brand values. Targeted, hyper-scaled, cost-efficient, attributable, actionable, brilliant.

The power of data and addressability

The application of an advertiser’s first-party data in segmentation, content, media activation and evaluation has never been more viable or, indeed, urgent as marketing’s cookie era comes to an end. A connected customer journey, tailored to individual needs, connecting media and content and delivered at scale is a proven driver of marketing effectiveness (200% revenue growth, according to BCG). 

The value of truth

The internet has shone a light on brand inauthenticity and has, in effect, closed any gap between claim and truth. The delivery on customer expectation has improved the effectiveness of advertising when customer value is judged in the long-term. This is the modern expression of McCann Worldgroup’s century old “truth well told” motto and a vindication of the need for brands to earn meaningful roles in people’s lives.

A step change in measurement

Our industry has pioneered sophisticated measurement techniques that have become critical infrastructure in guiding media investment. The latest full-funnel evaluation systems provide a continuous assessment of all commercial effectiveness drivers, including brand sentiment. Accordingly, agency remuneration is becoming increasingly performance-oriented.

A new breed of brand

Finally there has been significant change in the top advertiser set. League tables are now increasingly shaped by digital economy brands that have emerged in the last two decades. These brands understand and value the potential of advertising in building distinct brands and accelerating market share, because their business model is so immediate and well integrated.

20 of the current top 100 UK advertisers have been born of the digital economy. You only need look at the innovation, disruption and dramatic introduction provided by Cazoo and Cinch in used car retail over the last 18 months. Such innovation and disruption across all sectors will only become more frequent, and we anticipate the digital economy accounting for 50% of the top 100 advertisers by 2026.

The digital economy sector is shaped by customer growth and customer value, under-pinned by robust and sophisticated approaches to attribution. Their investments, if not proof, stand as testimony to the power of communications and the services provided by the UK marketing and communications industry.

In these circumstances we identify three golden principles:

1. Media and creative must work together 

The close alliance of creative and media thinking in real time has never been more valuable or well proven.

2. Clarity of objective and measurement are key

With performance so much better defined and measured the precise nature of objectives and measures becomes even more important in both creative and media terms.

3. Brand, media and commercial contact strategy must all be consonant and meaningful – to maximise the clarity of the meaningful role the brand can play in people’s lives

If we can do all these, we may just have got what we wished for: advertising and media never being more valued.

This article first appeared in www.campaignlive.co.uk

Seeking to build and grow your brand using the force of consumer insight, strategic foresight, creative disruption and technology prowess? Talk to us at +971 50 6254340 or mail: engage@groupisd.com or visit www.groupisd.com/story

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