Boris And Brexit See Growth Grind To A Halt

It is no secret that the Brexit blues have fallen on the nation. Whichever barometer you look at, customer confidence is low, particularly when it comes to big-ticket items.

Car sales have fallen through the floor, there are amazing deals on foreign holidays to counter a lack of sales so far, and in conversations I've had, even real estate agents are down in the mouth about the latest figures showing house prices are falling.

Hence, it will come as little surprise to see that budget growth in the Q2 IPA Bellwether Report is down to 0%. Around 34% of respondents reported being pessimistic, and just 8% were optimistic. The difference between the two is the worst figure the IPA has recorded since the end of 2011.

The takeaway is that marketers and advertisers share the bleakest outlook they have had for nearly eight years.

Although the overall figure is 0% growth, this isn't the whole picture. As you would imagine, because it always shows growth, internet advertising is up and so is investment in "main media."

However, at 11.5% and 5.6% growth, respectively, the upward tick is flattening out compared to previously recorded new investments. Events are also up.

The big losers are direct marketing, sales promotions and PR. These areas of marketing and advertising going into the red counteracts the growth elsewhere, leaving us at 0%.

The feedback from the IPA is that not is this a symptom of concern over Brexit and Boris -- it also shows, in the organisation's opinion, that companies are looking for long-term growth and focus on branding. 

I'm not so sure. I think nobody is brave enough to stop digital advertising, and for good reason.

Imagine being the one in the room saying we should forget about data-driven targeting and go back to flyers instead. It could be said that main media is more about branding, because there is no "buy now" button which makes the internet more tactical. However, I'd say the two channels balance each other out and they can both be used for branding and tactical campaigns.

What is clear is that direct marketing is in a very bad place. It always claimed that GDPR would send people flocking to it for non-personal campaigns in particular. They haven't, and these figures show a 9% drop year-on-year. It's usually considered an expensive channel, and one can imagine that is why it is being cut in a time of economic uncertainty.

Speaking of which, the uncertainty of hiring PR people to say nice things about you, and hope the press and influencers agree, is also down.

So I would disagree that this is mainly about branding and long-term, although it may be a part of the truth.

I would suggest that digital and main media advertising doing ok, while direct marketing and PR are suffering, shows that companies are reverting to what they know best. They are reverting to marketing they believe will be most cost-effective than direct marketing. Some of it will be brand-led, and some tactical.

The fact that sales promotion activity is also down suggests they don't believe pricing can help too much. I suspect that Brexit is playing a role here with a low-value pound making imported products and services far more expensive than before. This means there is less opportunity to cut cost and, if you look at the high street, there have been endless sales for the last year or two, and still many big names are out of business.

So, the Boris and Brexit knock-on effect is to stick to what you know best. Prices are already low, so that is not the answer -- but reaching out to people on the media you have known can work in the past is a reassuring tactic that is leading direct marketing in a very precarious position. 

Next story loading loading..