As Britain waves its long goodbye to the European Union, there are understandable concerns around consumer confidence and the attractiveness of the country to talent.
We ask the industry, including WPP chief Mark Read and Sky Media’s Debarshi Pandit, how Brexit really stands to change the world of advertising and marketing – and what they’re doing to prepare.
Mark Read, chief executive officer, WPP
It’s hard to prepare for a no-deal Brexit. Logic tells us that won’t happen, and if it does we’ll just have to deal with it. There’s no reputable economist who 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.
Karen Blackett OBE, country manager, WPP UK and chair, MediaCom UK & Ireland
Growth in the marketing communications industry is slowing down. It’s hard to forecast to what extent, thanks to what Danny Dyer so eloquently dubbed “this mad riddle of Brexit”.
But clearly, companies looking to find contingency funds for a no-deal Brexit are taking some of that money from marketing budgets. However, cutting ad spend will reduce income.
Research shows that, firms that cut ad spend during difficult times typically see sales and income fall by 20-30% over the following two years as a result. Smart advertisers see this uncertainty as an opportunity to invest and to steal share of voice, which is linked to longer-term gains in market share and growth.
The success of the British marketing industry is built on its talent. The UK is a magnet for international talent and, if we are to continue to lead the world, our industry must continue to diversify further to future proof itself. But Brexit threatens this. We no longer look like a welcoming country. Talented people will choose to go elsewhere.
Some of the talented people who have already decided to come here will choose to leave. I for one do not want our industry to go backwards, back to the domain of a privileged few and unable to connect with the fabulous fruit salad of cultures and attitudes that our Britain has become.
Piers Newson-Smith, head of brand planning, Direct Line Group
The only thing most people are certain about on Brexit is that they haven’t got a clue. No one knows when or how it’ll happen. So consumer confidence is in the doldrums.
Brands play a vital role in giving customers confidence. They are the hallmark of choosing products that are safe, genuine and good value. That’s been true since the dawn of imported food, when logos reassured people that they weren’t about to trough down on poison.
In economic uncertainty, it’s tempting to snuggle up in the comfort blanket of short-term ROI. That’ll change the battleground in most categories, creating a huge opportunity for marketers who dare to stick with long-term brand building.
Nigel Gilbert, chief market strategist EMEA, AppNexus
While the threat to talent has been well-documented, Brexit will likely force marketers to look more closely at how they can recruit from a talent pool of greater diversity, including professional backgrounds and skillsets.
The UK remains a great place to work, which is why we are investing significantly in our UK-based workforce. And I’m confident that this is a challenge the marketing industry will embrace.
Phil Smith, director general, Isba
The critical issue for government is to deliver certainty. In terms of day one issues for the industry, data adequacy is the first priority. Many of our members have already put contingencies in place to mitigate this risk, but we should look to government to take the lead.
Access to talented people will be a pressing need and, more broadly, we have to recognize that advertising and marketing are discretionary spends. 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. We continue to work with the UK government’s Department for Digital, Culture, Media and Sport in particular to ensure that the voice of advertisers is heard throughout government on all of these issues.
Christian Polman, chief strategy officer Ebiquity
If there’s one thing we know about Brexit, it’s that it has produced a complex set of unknowns for our clients. In the uncertain environment, the most important thing is to build flexibility into business models, which includes shifting forecasting and planning to be faster and more responsive.
We are recommending that companies change the way they plan to factor in how Brexit might impact their overall commercial performance. Given the current uncertainty, many clients, especially retailers and manufacturers, are investing in analytics services to help them measure and understand what the likely post-Brexit world will look like, and put in place contingencies to deal with a range of likely outcomes.
In many of the sectors we model at Ebiquity, including FMCG, auto, retail and travel, we are seeing an increased demand to factor in the impact of various potential Brexit outcomes.
This means taking into account a variety of broader economic factors, such as
consumer confidence, employment and taxation scenarios.
The common reflex during uncertain times is to pull back. Yet, when it comes to marketing spend in particular, this is often not the optimal thing for brands to do for a number of reasons.
Media prices tend to fall as demand weakens, which in turn helps advertisers improve their marketing return on investment. Also, brands that continue advertising during uncertainty can improve their share of voice in a depressed market, potentially boosting their return on investments. And lastly, going ‘dark’ in marketing terms has a long-term impact on losing distribution and increasing price responsiveness, and it is typically more expensive to catch up on these losses once demand comes back into the market.
Debarshi Pandit, head of special projects/multicultural business, Sky Media
I wish I had a crystal ball, but the reality on the ground is that none of us do know how Brexit will eventually pan out.
However, the best thing marketers can do is prepare to be flexible and creative with the unique opportunities that might come along whatever Brexit it turns out to be – soft or hard.
In the case of the former, life will probably go on as usual. For the latter, marketers would be better looking across the fast-growing economies of Asia to capitalize on future growth and success.
And, to be successful, they will need diverse people in their teams who understand the psyche and cultural understanding of the Asian markets, as they are starkly different from the west.
In other words, having a diverse and inclusive team will be of paramount importance for the marketing industry doing forward.
Chris Lee, chief financial officer, Jellyfish
The first point to make is that, at the moment, nobody actually knows what Brexit will look like. It’s difficult to assess its potential impact on our industry. As a business, the only thing we can do is base our decisions on the information that we have available. For us, this means taking a business-as-usual approach.
In some ways, the debate around Brexit is reminiscent of the millennium bug, when there were serious concerns that the mass adoption of computers and digital technology would have disastrous consequences. My feeling is that nothing will fundamentally change on Brexit day itself, but I do think there will be a longer-term effect – the biggest concern being whether the uncertainty around Brexit becomes the cause of a macro-economic downturn.
History suggests that, at times of uncertainty, businesses and countries continue to evolve, preparing for and dealing with any challenges that they come up against. I think it will be the same for Brexit and that the marketing industry will use its creative nous to thrive in uncertain market conditions.
The Brexit conversation has certainly brought the question of international trade to the fore for any growing business. In our particular case, Brexit has given us the confidence to push forward with a global strategy much faster than we may otherwise have done, allowing us to future-proof our business.
In the last 12 months alone we’ve launched six new offices with a further 10 openings planned for 2019. While Brexit might add an extra administrative layer to traveling and working abroad, mobility across territories will still continue. Diversity is a key driver of business success and, as an industry, it’s essential we continue to work with an international lens to service the needs of today’s global brands.
This feature first appeared in the Globalization for Good issue of The Drum magazine, in which we look at how the coming wave of connectivity associated with the fourth industrial revolution is set to impact business and society.