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Editor's note: Simon Woolley is senior market analyst at B2B PR agency IBA International. 

The COVID-19 pandemic has been a period of immense disruption for organizations across the globe and across almost every industry. And as we enter the new year, organizations face another challenge as the U.K., the world’s fifth largest economy, leaves the EU.

The outlook forecast by industry experts1, put simply, is quite bleak. Those organizations emerging from the pandemic disruption seemingly unaffected are predicted to be heavily impacted by the effects of Brexit.

As a result, IBA International conducted primary research2 using Cint, a market research technology company, to discern if the pessimistic industry predictions reflected the reality that B2B organizations were facing. We surveyed 450 verified executive B2B marketing managers from the U.K., U.S., Australia and New Zealand (ANZ) to investigate the impact COVID-19 has had on their organizations and how they plan to tackle the upcoming year in the wake of lockdown and in the advent of the post-Brexit era.

The results suggest a far more positive outlook for the future. 

Take advantage of new opportunities

Despite causing business disruption, B2B organizations have been using the COVID-induced downtime to assess their pipelines and to take advantage of new opportunities. When asked how they have prepared their pipeline and lead-generation plans for economic recovery, only 15% of respondents said that they had made no changes. The vast majority (86%) of organizations said they had used the time to bring to market new solutions or to alter their product roadmap.

Organizations also indicated that expansion into new industries and geographies was a part of their recovery plan; 28% and 26% of respondents said they planned to move into new industry sectors and geographies in the future, respectively. 

When asked about plans for international expansion related to Brexit, the results show an optimistic outlook from organizations across all geographies. For countries outside the U.K. looking to take advantage of post-Brexit trade deals, organizations in Australia and New Zealand were more open to trading with the U.K. than their U.S. counterparts. 

When asked what conditions would encourage them to do business with U.K. organizations post-Brexit, 27% of U.S. businesses said they were not looking to trade with the U.K. compared to only 20% of organizations in Australia and New Zealand. However, a higher percentage of U.S. organizations (17%) claimed that they already export to the U.K. than organizations in Australia and New Zealand (10%). 

U.K. organizations were also keen to explore international trading opportunities post-Brexit, with only 17% saying that they were not open to trading outside the U.K. and just under a quarter (23%) reporting they were only looking to trade within the EU. 

When asked to expand on their motivations behind international expansion in the wake of Brexit trade negotiations, favorable trade agreements were the biggest pull towards international trade. In fact, 38% of ANZ organizations and 32% of U.S. organizations said that favorable trade agreements between the U.K. and their country would be a top reason to trade with the U.K. Similarly, low tariffs on goods and services within the U.K. would encourage 29% and 23% of organizations in Australia and New Zealand and the U.S., respectively, to export to the U.K.

For U.K. organizations, trade relations with the EU post-Brexit were flagged as a determining factor for exporting further afield. When asked what conditions would encourage them to explore new geographical locations for business ventures, over half (59%) and over a quarter (26%) of U.K. organizations said that favorable trade agreements with countries outside the EU and high tariffs on selling goods and services within the EU, respectively, would be key considerations when contemplating expansion outside of Europe. 

Stands in the way of growth 

But despite the majority of respondents (54%) demonstrating a desire to explore expansions in new geographies or industries, a lack of international PR and marketing experience stands in the way of growth plans.

For 40% of respondents, insufficient marketing budget was the obvious roadblock for international campaigns. But a more common challenge was a lack of media knowledge and experience. A combined 55% of marketing managers reported a lack of local media knowledge in the geographies they intended to penetrate and little brand or product knowledge for their new intended geographies. PR and marketing agencies will then be crucial to successfully support these expansions.

When asked how much they spend per month on PR and marketing agency support, over a quarter (26%) of B2B organizations in the U.S. and Australia and New Zealand revealed that they spend between $5,000 and $15,000 per month on PR agency fees per month and 36% of B2B organizations in the U.K. spend between £5,000 and £15,000 per month on agency fees. One notable difference indicates that U.S. and ANZ businesses were more likely than their U.K. counterparts to spend more on PR agency fees. Five percent of U.S. and ANZ organizations spend over $40,000 per month on PR agency fees compared just to 2% of U.K. organizations. 

But COVID-19 has exacerbated existing pressure for budget cuts, so a focus on value for money is driving current PR and marketing campaigns, especially within B2B organizations. Following the pandemic outbreak, the research found that a staggering 45% of B2B organizations from U.S., ANZ and the U.K. have cut public relations spending in response to the pandemic. The pandemic had the biggest effect on the budgets of U.K. marketing managers as over half (54%) of surveyed managers admitted to either having cut or eliminated their PR spend as a result of the COVID-19 pandemic, compared to 51% in the U.S. and 50% in ANZ. 

Value is a priority

With budget cuts a reality for over half of marketing managers across all regions, value for money is a priority but only 11% of B2B marketing managers across U.K., U.S. and ANZ claim that they do not encounter any problems when measuring the effectiveness of their PR agency. Nearly half (40%) of marketing managers admit they find it difficult to measure the contribution of their PR and marketing agency to the overall business. 

When probed further about the reasons for their dissatisfaction, a lack of value for money and clear measurable results from their incumbent agency were among the main reasons for criticism from marketing managers. The research found that 41% of marketing managers feel that their public relations agency put too much focus on high levels of media engagement over content placement metrics. In addition, 34% feel their public relations agency is ineffectual as they place their content in the same small selection of media.

As well as not being able to demonstrate clear, measurable results, 38% of marketing managers reported that a lack of affordable agencies that could work in a number of countries has impacted their success in internationally expanding PR and marketing campaigns. 

Not a good fit

Over half of B2B marketing managers believe public relations agency fees are too high, with 30% suggesting that the cost outstrips the return and a further 21% highlighting that they feel pushed by senior management to go with well-known agencies that are too expensive and not a good fit for their business.

The high costs associated with PR and marketing agencies do not, as the research found, align with the results that marketing managers are seeing and budget pressures. Just 27% of U.K., U.S. and ANZ marketing managers said they were very satisfied with the value they receive from their public relations agencies. U.K. and ANZ marketing managers were less satisfied with the value they receive from their PR and marketing agencies than their U.S. counterparts, with just under a quarter of U.K. and ANZ marketing managers (20% and 24%, respectively) saying they were very satisfied with the value their PR agency was delivering in comparison to 30% of U.S. marketing managers. 

Up to 50% of budget wasted

The lack of satisfaction that marketing managers get from their PR and marketing agencies corresponds to the amount of their monthly budget that they think is wasted. Only 10% of organizations felt that none of their budget was wasted, with the majority (85%) of organizations stating they believed up to 50% of their budget was wasted. Organizations in Australia and New Zealand were most likely to report they felt their budget was wasted, with a huge 75% claiming they felt at least 10% of their budget was wasted. The report found that 9% of marketing managers in Australia and New Zealand felt that more than half of their budget was wasted. 

When asked where their budgets were wasted, a third of marketing managers felt that agency staff spent more time on status calls than achieving actual results. Additionally, 28% accounted a disconnect between regional agency offices as a reason for wasted budget. 

Criticism was also directed towards the agency staffing structures. Almost a quarter (23%) of marketing managers reported budget wastes when junior staff are put on accounts that lack senior leadership and a further 19% felt high staff churn contributed budget waste. Twenty percent claimed false project starts were a factor in budget waste and almost a quarter (24%) said budget waste stemmed from being undervalued by agencies that did not value their business as a smaller client. 

New approach needed

With wasted budgets, low satisfaction with current agency support – and more importantly, with marketing managers receiving limited value – a new approach is needed to ensure ambitious marketing plans can be achieved during economic recovery. 

While marketing managers were asked to share their criticisms, they were also asked where they would like to see improvements in their PR agency support to ensure that they can effectively expand their PR and marketing campaigns to seize the expansion opportunities presented during economic recovery. Nearly a third (31%) of marketing managers across all regions said they would like a lean, waste-free approach to generating new and repurposing existing content in the media and a further 30% claimed that objective and quantifiable coverage metrics for flat-fee monthly invoicing would make them confident in their ability to achieve results with their PR agency. Over a quarter (28%) of marketing managers said they would like a small and dedicated team to support them and a further 27% opted for a process that reliably generates placements in targeted business media. 

Adapt to their needs

The future is shrouded in uncertainty as an end-date for lockdowns around the world remains unknown. But this primary research demonstrates that B2B organizations have adapted to the new norm and now look to the future with optimism, whether lockdowns are lifted or not. The desire to expand business into new industries and geographies to capitalize on COVID- and Brexit-induced market changes is evident but the lack of value provided by traditional agencies means a new PR model needs to be adopted to support expansion plans. B2B marketing managers are seeking more results-driven and affordable options and PR agencies should adapt to their needs.

References

1 www.research.ox.ac.uk/Article/2020-04-07-the-economic-impact-of-COVID-19

2 www.iba-international.com/b2bresearchreport1.shtml