The advertising industry’s trade body has predicted strong advertising growth of 5.2% in its forecast for 2022 – albeit slightly lower than the 6.2% in its previous quarterly report.
The Institute of Practitioners in Advertising report found that more advertisers lowered their budgets for audio, print and online outlets in the last quarter of 2021 than raised them. However, more were planning to raise budgets for video advertising.
The IPA’s Bellwether Report surveys advertising professionals at 300 of the UK’s biggest companies in the final three weeks of each quarter.
It says Q4 was the second strongest for adspend growth since 2019 – beaten only by the quarter preceding it. It is the third successive quarter of growth.
Despite this, the IPA has lowered its spending growth forecast for 2022 from 6.2% to “a still-strong 5.2%”.
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The downward revision reflects, it says, constraints on budgets from “the emergence of the Omicron strain of Covid-19, heavy supply-chain disruption and strong inflationary pressures”.
According to the report: “A net balance of +6.1% of companies upwardly revised their total marketing budgets at the end of last year.” This compares with a 12.8% net balance in Q3 of 2021.
Net balance refers to the percentage of companies who increased their spend minus the percent of companies who decreased it.
A net balance of 34.5% of the companies surveyed said they plan to expand their marketing spending in the 2022/23 financial year (though this figure includes all types of advertising).
And 45.7% of respondents said they were optimistic their marketing budgets would grow, against 11.2% expecting cuts.
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Going into 2023, the IPA anticipates more modest growth of approximately 2.5% “as momentum from the economic recovery peters out”. Following that it foresees growth of “1.3%, 2.3% and 2.5% in 2024, 2025 and 2026 respectively.”
Video had the best growth in the final quarter of 2021, with a net balance of 7.3% of companies saying they had increased their spending on television, cinema, and online video advertising.
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A net balance of 5.9% said their print and online brand advertising contracted, however, and a net balance of 6.3% that their radio and podcast spend had dropped.
But advertisers were bullish on their plans for 2022/23, with a net balance of 17.4% saying they planned an increase in their media advertising budget for the next financial year. A net balance of 19% also said they were increasing their budget for events.
Joe Hayes, the report’s author and a senior economist at information provider IHS Markit, said: “The emergence of the Omicron variant saw a modest tightening of restrictions across the UK, but some key overseas markets, such as those in the EU, saw more stringent measures. On balance however, it appears that many companies are doing their best to adapt to the ‘new normal’.”
Nick Reid, the EMEA vice president for video analytics company DoubleVerify, said: “With the continued growth of short-form social video platforms and the CTV marketplace continuing to evolve, we are likely to see investment continue as brands expand beyond the more traditional digital video formats.”
Sivan Tafla, chief executive for adtech company Total Media Solutions, advised publishers to focus on video: “Budget pressures are set to increase for publishers as we climb down from the pandemic peak in page views, in addition to the seasonal downturn in eCPMs [effective cost per thousand impressions] at the beginning of the year. This means they need to do more with less, all while appealing to advertiser expectations.
“Publishers should take note of the strong performance of video ad spend in Q4 2021 and expand their ad offerings accordingly. Not only will this address advertiser demand, but video is also a format that offers a far higher return on investment.
“When it comes to video impressions, the CPM ranges from $3 to $10 in the UK, which is much more lucrative than display ads that typically have a CPM between $1 and $2. All this should indicate to publishers the importance of a strong video strategy – both in terms of in house and syndicated content.”
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