Brexit Advertising

Brexit chaos: advertising's trade bodies admit commercial concerns are mounting


By Rebecca Stewart, Trends Editor

March 13, 2019 | 7 min read

Following on from a second rejection of Theresa May's Brexit deal in parliament, the prospect of a "disorderly" withdrawal from the EU is looming large over the ad industry with trade bodies predicting "brand disinvestment" amid the uncertainty.

The Incorporated Society of British Advertisers (Isba) told The Drum that while it is continuing to work with the government to ensure that the "voice of advertisers is heard" in negotiations, it is concerned that the continued uncertainty will see the industry soon take a financial hit.

"Discussions are ongoing in order to highlight the fact that advertising and marketing are discretionary spends," said James Barge, its director of public policy.

"If the broader environment is disrupted then we will see impacts to the vibrancy and spend in our sector as well as disinvestment at a commercial level."

Trade bodies like the Advertising Association (AA) and the IPA have been instrumental in cautioning the government on the wide-reaching implications of the UK's exit from the EU on ad land, but as MPs prepare to vote on Wednesday evening (13 March) on whether to block the UK from leaving the EU without an agreement later this month, it's clear concern is reaching its peak.

The vote only applies to the 29 March deadline and would not rule out the prospect of a no-deal exit later this year, if parliament is ultimately unable to agree a way forward.

Paul Bainsfair, director general at the Institute of Practitioners in Advertising (IPA) said it was also in "regular" contact with Westminster. In the aftermath of Tuesday's (12 March) vote, he noted there was still uncertainty over what sort of Brexit the UK would have but said the IPA has "provided [its] agencies with comprehensive legal guidance to cover all possible scenarios."

Though, he too expressed anxiety over the financial implications: “Over and above the political issue, the continued uncertainty is giving many of our members cause for concern from the point of view of their clients who, understandably, are more reluctant to commit to activity than they would otherwise be," he revealed.

An Enders Analysis forecast published earlier this year claimed a no-deal Brexit would plunge the ad industry into its first recession in a decade.

Enders predicted that in the event of an abrupt exit overall spend was likely to decline by 3% or £1.4bn and that TV and newspapers were most likely to be impacted in either case.

Elsewhere, the AA and Warc's latest ad spend forecast a muted 4.6% growth in overall ad spend for 2019, calling on the UK government to provide businesses with clarity on what a breakup from the EU means for them.

What Brexit concerns are agencies and brands expressing behind closed doors?

Brands and agencies have been coy in addressing how they're readying themselves for a no-deal.

WPP chief executive Mark Read said last week that it was hard to prepare for a no-deal Brexit because "logic tells us that won't happen".

"If it does we'll just have to deal with it," he added, caveating: "There's no reputable economist that thinks it will be a good idea in the short, medium or long-term. We just have to prepare for it as best as we can, and that's all I can say."

Big spender Pernod Ricard, meanwhile, recently admitted that a no-deal Brexit scenario would be “a short-term nightmare”. However, it was insistent that whatever form the UK’s departure from the EU takes, it wouldn't have any long-term impact on its marketing plans.

With the prospect of a no-deal or delayed exit looming large, though, execs from all corners of the industry have been laying their worries bare at the doors of trade institutions.

"Members’ concerns have remained consistent and, for many of our members they have already placed contingencies in place to mitigate this risk," said Isba's Barge.

"In terms of day one issues for the industry then data adequacy is the first priority, followed by access to the talented people required. It’s not good enough to assume that the UK is deemed adequate on the day before Brexit and will be the day of Brexit."

He said the "critical issue" for May's government was to deliver certainty and remove the threat of a no-deal.

For its part, the AA said member concerns were around " a growth and business-friendly immigration policy" so that UK advertising can continue to attract the brightest and best global talent.

"Critical as well are sensible deals on data flows and broadcasting rights," the AA added. "The Brexit process as a whole is concerning for services – considering its huge role in the economy – and for advertising in particular given our £132bn contribution to UK GDP."

Jon Mew, chief executive of the Internet Advertising Bureau, said digital players were worried about the impact of the uncertainty of the UK’s exit and "what this means for their ability to do business, as well as the potential economic impacts on the digital advertising market."

What needs to happen next?

As it has been before, the AA was explicit that the prospect of no-deal needs to be "taken off the table".

Wednesday's vote on rejecting a no-deal and others on a possible extension to Article 50 may show what Parliament is willing to support, claimed the AA.

"Looking specifically at a no-deal scenario, most advertising restrictions around the world are rooted in domestic regulation and falling back to WTO terms would leave the industry facing a number of non-tariff barriers."

Like others, its been preparing members for "a range" of outcomes, including no-deal. Those involved in the AA are also engaging with EU equivalents to speak up about the potential business disruption if there is no deal.

The AA added: "The continuing uncertainty and lack of clarity surrounding Brexit – only 16 days away – is concerning for everyone. Despite this, we will continue to press Government to the last moment for the best possible deal for British advertising, so that the UK remains the world’s advertising hub."

The IAB has been working with industry experts, including the former diplomat Konrad Shek, over the past year to help members prepare for all possible outcomes. This includes its policy and regulatory affairs team supporting members address the challenges and uncertainty surrounding Brexit since the vote in 2016. It's devised a Brexit checklist to help businesses prepare for any eventual scenario.

"We felt this was such an important issue for the entire advertising industry that we have made these resources available to all, and not behind any paywall," noted Mew.

Bainsfair, meanwhile, said that the IPA will continue to work with DCMS, BEIS, and the Treasury to relay concerns.

The outcome of May's second vote this evening may help put a more definitive timeline on when the uncertainty that's creeping into agency walls and brand marketing departments might end, but one thing that is certain is there will only be more obstacles for the ad industry to overcome in the months ahead.

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