IPA Bellwether Report: What does it mean for affiliate marketers?

New Delhi (India), April 29: With the release of the IPA Bellwether Report for Q4 2023, there is a lot of discussion and speculation going on in the market. Experts are trying their best to predict the trends from the report and what it means for the affiliate marketers in particular.

A majority of marketers and experts have observed a significant hike in the marketing budget in Q4 which shows that even after the market was slow, a large number of brands opted for increased marketing budgets for getting more benefits.

Instead of opting for a cost-saving approach, this alternative approach of investing huge amounts of marketing budgets had the entire industry talking about. As per the Bellwether report, a large number of brands, agencies, and companies have been investing heavily in marketing. 

It was also observed that events turned out to be the most trending and profit-making sub-category in marketing making a profit of +15.9%, followed by direct marketing which also experienced a significant rise (12.6%- 4.3%) in the budgets since the year 2005.

These two categories combined turned out to be the driving force of the entire marketing budget in the year 2023 and a similar trend is being expected to be observed in the year 2024 as well.

There were certain categories and subcategories that experienced a slowdown as compared to the last few years as well, namely: online advertising, video advertising, audio, and out-of-home. These four major categories witnessed a downward trend as per the Bellwether report.

Predictions of Ad Spend in 2024

In the Bellwether report, it has been observed that total ad spending is expected to see a downfall in the year 2024 as already seen in 2023. The forecast has been made that the year 2024 in the UK is going to start with a shallow recession with the entire year filled with challenges and roadblocks.

The second half of the year however is expected to make a recovery and see some growth while the ad spending in the year is expected to be low as was in the year 2023 (0.7% and 0.6% respectively). Moving on, with the S&P ad spend forecast the coming year 2025 looks a bit stronger with a 1.1% expectation, and this expansion is further expected to reach 1.7% - 1.9% throughout 2026 to 2028.

Company-Own Prospects Filled with Positivity

The report has also indicated a difference and gap between the company-owned prospects and industry-wide financial prospects in the year 2023. This further indicated that 13.8% of companies in the survey had an optimistic vision and approach towards Q3 2023. Additionally, 26.5% of respondents lacked confidence in the same.

This resulted in a -12.7% net balance which was the same as observed in Q2 as well (-12.6%). Moving on, the overall business confidence towards the industry-wide financial prospects has been facing a low for the last two consecutive years.

The Bellwether's sentiments towards their own business were in contrast with the rest of the trends. It observed that 32.4% of respondents felt confident about their business in the last 3-4 months while only 19.8% were low on confidence. This resulted in +12.6% of net balance which has been reported to be the most positive recorded from the 2021 Q3.

2024-2025 Budget Plans

As per the predictions, the marketing budgets for the financial year 2024-25 are significantly higher than the budget expectations for 2023-24. In the latest report, it has been observed that 44.5% of respondents with budget expansions whereas the rest are observed to be in a restrictive mode in the spending plans for 2024-25. This expansion is triple (15.1%) as the number restricting budgets.

Apart from this +29.4% of companies showed a robust marketing budget as compared to the previous financial year and with a robust outlook for the UK marketing as well. Apart from this, an optimistic approach is expected to be seen in a few other categories for the year such as Events with a net balance of +16.8%, Main media with a net balance of +14.2%, PR with a net balance of +10.6% and Sales promotion with a net balance of +8.2%. 

What’s in it for Affiliate Marketers?

For any brand or business, a slow market is something that no one ever wants to experience. However, in affiliate marketing, it is still a great opportunity to generate more business and earn profit leveraging the discounted deals and offers to attract customers.

In a slow market where brands would be working with a strategy of withdrawing budgets, affiliate marketing is one such strategy that can help them drive more profits. One such instance is of increased e-commerce sales during the pandemic with a slow market.

This is one of the reasons for the paid media to be one of the leading categories on the IPA report even though the report didn't portray a greener picture for all. Additionally, since digital marketing budgets are also being reduced, affiliate marketing is going to shine and make its way for marketers and turn out to be life jackets.

"Affiliate marketing can serve as a valuable strategy for brands seeking alternative and cost-effective solutions. Owing to its performance-based model, it can help advertisers save money since they're only paying for conversions and not vanity metrics. Also, via affiliate marketing, they can reach communities and influencers that enjoy genuine connections with their audience, helping them put their brand on the consumer map at a minimal and justified cost. In our experience in the marketing industry, we've seen that brands perform best when they create a perfect amalgamation of affiliate marketing and other performance marketing techniques, instead of focusing on either one", said Hemant Mann, CTO & Co-Founder Trackier.

In a Nutshell

From the Bellwether report it can be concluded that although the year had been slow for other industries and sections of marketing, the impending slowdown in marketing activities and the reduced budget for paid advertising is further going to present an opportunity for the affiliate marketers, since this form of marketing only charges brands or advertisers on an approved conversion.

In addition to this, the report also indicates that events and direct marketing have been the most profitable segments. However, for the year 2024 based on the reports, the predictions are that Events, Media, Sales Promotion, and PR will turn out to be the head-turners. Based on this, furthermore, the marketers are advised to look for alternative options such as affiliate marketing as well and make the most of their budgets.