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Advertising Association Brexit Advertising

What new PM Theresa May’s government means for the UK’s advertising sector

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By The Drum Reporters, Editorial team

July 14, 2016 | 10 min read

The UK’s advertising industry has met the unveiling of prime minister Theresa May’s new government with mixed opinion.

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What new PM Theresa May’s government means for the UK’s advertising sector.

May’s stance on the economy is scarcely known, while her views on Brexit are yet to crystallise so it’s not surprising that her ascension to the top of the political ladder has both worried and reassured the nation’s advertisers. Caution is the overwhelming feeling toward May from those marketers interviewed by The Drum, mindful that her previous u-turns on matters like internet snooping plans and human rights could see her round on the advertising industry in order to galvanise support.

“Advertising industry bashing is a vote winner and our sector being protected won't guarantee any political support,” said Scott Knox, managing director at the Marketing Agencies Association.

Theresa May sets out vision for business

From the little May has so far shared about the future, it's clear that her government will attempt to take the centre ground she feels Labour has vacated under Jeremy Corbyn’s leadership, with her vision for business reform very much borrowed from the Ed Miliband playbook of 2015.

“With Theresa May in the driving seat our industry needs to remain cautious on what's coming down the track,” said Knox. “From Eurosceptic to very quiet remain supporter, from voting against gay adoption in 2002 to becoming a champion of same sex marriage in 2010, May has shifted perspective on key issues throughout her career. We can hope this is because she is open to change but, more likely, it's classic politician behaviour; only interested in winning elections.”

And while her move into number 10 has been swift, there are already signs that May and her reshuffled cabinet will attempt to tackle the excesses of corporate Britain.

Where former chancellor George Osborne pushed to reduce the deficit and introduce more austerity measures, May proposes the government seek to reduce a budget surplus by the end of the parliament; where Osborne’s pride and joy was his northern powerhouse, May claims she will help “every single one of our great regional cities” not one or two of them. The country’s premier politician has been at pains to stress that her government will be an altogether different prospect to the business world.

“The government I lead will be driven, not by the interests of the privileged few but by yours. We will do everything we can to give you more control over your lives…When it comes to taxes we will prioritise not the wealthy but you,” assured May in her first address as the prime minister, rhetoric that would have pricked the ears of WPP’s Sir Martin Sorrell after one third of its shareholders refused to back his £70m pay package.

As ever the advertising executive moved the spotlight from himself to the wider industry when asked by Sky News for his thoughts on May’s bid to curb boardroom excess. “If worker/employee representation; if limits on pay end up on companies focusing on the long term then that will be to our [WPP’s] benefit.”

What does Britain’s new prime minister believe?

May’s vision of a more moralistic type of politics are lofty for a political party with a slender majority of 12 in parliament at a time of great pressure on government budgets. Should May’s ideals fail to chime with her party then that challenge will swell as her peers have shown they are willing to go against their leader to do what they think is right.

Much then rests on her new cabinet and for the advertising world that shakeup will be pivotal to expanding the UK creative sector that is worth almost £10m an hour to the economy.

No role is more pivotal to that growth than the new chancellor Philip Hammond, the former foreign secretary now tasked with stabilising a volatile economy. He has already ruled out slapping the nation with emergency taxes as his predecessor threatened to do, vowing that the new government would move ”quickly” to restore “business and consumer confidence”.

“In the short-term, the decision to exit the European Union (EU) came as a surprise to the markets and a surprise to a lot of people and businesses and therefore its rattled confidence,” the chancellor told the BBC. “Its caused people to put plans on hold while they wait to see how things clarify. The fact that we’ve moved so quickly to resolve the question of the leadership of the Conservative party I think will help to restore business and consumer confidence.

Top of Hammond's intray will be imminent plans to cut interest rates. If the rumours are to be true and the Bank of England slashes interests to the lowest levels since 1694 then the chancellor and the treasury will play a role, while there’s also a G20 meeting in China he will need to attend to bang the drum for the nation. Hammond may have to try and instigate more public investment projects to plug the gaps should the private sector decide to limit investment during this uneasy period.

"Theresa May is an experienced politician who has skills to drive an important new agenda as well as the skills to guide the UK through to our exit from the EU,” said Ian Twinn director of public affairs at the advertising industry trade body ISBA.

“ISBA wants to work closely with the new government in the interest of the whole of the advertising industry. Our industry is a big contributor economy here and globally and with that we fully recognise we have a big responsibility.”

Advertisers will pay close attention to the newly-created International Trade department and secretary for exiting the EU, led by former senior Conservatives and arch Brexiters Liam Fox and David Davis. For the first time in decades, there will be a trade ministry trying to strike deals for the country when previously it would have all been done via the EU.

There’s also May’s stance on immigration that’s concerning advertisers ahead of the negotiations to leave the EU. As home secretary, her immigration policy rules slashed the influx of foreign students by 88 per cent between 2014 and 2015, while the now infamous “go home” vans offering immigrants help to return to their home countries were roundly criticised.

Agency executives will be hoping May’s outlook will have cooled now she is prime minister, with WPP’s Fitch, Zone and Roast among the agencies to make talent acquisition from Europe one of the biggest challenges post-Brexit. That uneasiness is shared by the tech industry where nearly a third (31 per cent) of 1,200 tech entrepreneurs think the economy will now slow recruitment.

“Firstly, we hope the UK’s fast growing tech industry will be a priority for her. London has emerged as a centre for fintech, edtech and media tech and we need to hold on to that position," said George Northcott, co-founder and business development director at start-up incubator Founders Factory.

“With her strong views on immigration, we’re keeping a very close eye on the impact her appointment will have on talent as it’s the lifeblood of the sector. We want to know if those EU nationals already here are able to remain and how she’ll build Britain’s brand as a place that European founders can come and set up companies with easy access to the continent. On the flip side, we need to remain attractive to investors; 85 per cent of UK VCs have investments from the European Investment Fund and we need to protect that. The government has previously done so much to support UK tech, it would be a real blow if this wasn’t maintained."

Beyond immigration, there’s the privacy question the prime minister will need to address. May was forced to scrap highly controversial plans to give the police and security forces full access to everyone’s internet browsing history last year. It’s something those in the technology space haven’t forgotten, and have called for a more nuanced approach from the newly-installed premier.

"One of the key barriers to adoption of connected devices in the home is the often spoken about privacy concerns,” said, Cameron Worth, Founder of SharpEnd, the UK’s first IoT agency.

“There’s also about 5,000 misguided Linkedin blogs about it too. Let’s hope Theresa May doesn’t add fuel to the fire as she has a pretty well documented track record of wanting to increase police and state powers to put you under the magnifying glass (such as being a keen advocate of the draft communications bill). There’s already a post-Snowden general distrust of anything government and if people are feeling like their lives are already under constant surveillance this could impact how comfortable consumers will be with adopting IoT products and services in personal environments such as the home.

“It’s no secret that there is about to be an explosion of consumer data being created through the Internet of Things and I hope that the debate about what to do with this data can be had in a fair and honest way with a focus put on the value for the industry and economy of not putting the brakes on unnecessarily.”

Despite some level or normality returning to politics following the Brexit vote, advertisers are still unsure of its impact. So much so that they’ve reined in spend and for the first since 2013 the IPA Bellwether report is predicting a fall in ad spend for 2016 and has significantly downgraded its forecasts for 2017.

“If ever advertising had to be acutely aware that most of its audience not only doesn’t live in London, or London Fields even, it’s now,” said Jonathan Trimble, chief executive at 18 Feet & Rising.

“Teresa May’s de facto appointment as PM is a move away from Bullingdon clubs and an attempt to recognise the unrest of the 99 per cent whose lives have been on pause the past ten years. Ultimately, this is a stop gap response to a much bigger set of uncertainties. In the meantime, brands and advertising need to stop holding up middle class images of happy lives that are totally un-relatable to most of the country who do not live near a John Lewis.”

There’s suddenly a new team in office and now their hard work begins.

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