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Media Agency Group on Brexit: The figures to date don’t back-up Sorrell’s anxiety

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By John Kehoe, managing director

November 3, 2016 | 5 min read

Earlier this week, WPP boss Sir Martin Sorrell spoke of the first signs of post-Brexit anxiety in the advertising marketplace, however, based on Media Agency Group’s experience to date, that anxiety may well be misplaced.

John Kehoe of Media Agency Group

John Kehoe is managing director of Media Agency Group.

The UK advertising market enjoyed significant growth in the first six months of 2016, rising by 5.2% to hit the £10bn mark for the first time. The encouraging statistics, published in the latest Advertising Association/Warc expenditure report, may come as a surprise to some. This year’s EU Referendum and Brexit result plunged many UK businesses into uncertainty, and it was advertising that was expected to perhaps take a hit due to these concerns.

However, although the true impact of Brexit will begin to unfold in 2017, next year’s forecast has been downgraded by just half a point and still suggests growth for the industry as a whole. While UK adspend is up in general, the majority of the growth comes from a surge in spend for online and out of home advertising, which have risen by 16.9% and 9.6% year-on-year respectively.

In the immediate period following Brexit, the general consensus was that a lengthy period of uncertainty would follow, along with a potential negative affect on business as brands consider their position and the effect the vote would have on them. In the 4 months since Brexit, the effect here at MAG has been quite to the contrary – client confidence is high, revenues are up and the short to medium term forecast looks good.

From the MAG perspective, Brexit has allowed additional revenue from our clients based outside of the UK due to the weak sterling, for us this has been a positive in revenue growth, with these committing 2017 budgets now to take advantage of the exchange now before it inevitably improves Q1 & Q2 of next year. We are aware that Sorrell believes growth seen on the back of the weak pound to be ‘false gains’ but we believe that there is more to it than that.

A Digital Out of Home display.

For MAG, this growth comes as little surprise in a year that has seen more and more brands begin to recognise the results that data-driven advertising campaigns can deliver. As an agency working with international clients from across Europe and beyond, we’ve experienced first-hand that confidence in UK advertising is still there, particularly in more accountable formats such as online and digital out of home.

We’ve found that more and more brands are turning to digital out of home due to its ability to be more targeted and more accountable – as an agency, we’re delighted to report that we’ve seen a 14% rise in the number of out of home campaigns we’ve ran in 2016 (considerably higher than the industry’s average growth of 9.6%), with our digital out of home figures up by almost 60%. As markets become more competitive across all sectors, brands are requiring more dynamic, data-driven campaigns which traditional outdoor cannot always offer.

Our specialist outdoor division, Out of Home International, understand the strengths of digital out of home and how it can be used to enhance the power and effectiveness of campaigns, resulting in DOOH growth at our agency that is above the market trend.

We want to make sure brands are using out of home to its full potential and capitalising on the incredible innovation happening in the industry. Digital outdoor shouldn’t just be seen as an extension to traditional out of home where you simply book a site for two weeks – we’re giving our clients the opportunity to reach specific audiences at certain times of the day, capture data, react to the latest trends and news and even respond to the weather with their campaigns.

It’s encouraging to see the UK market showing strong levels of resilience against any potential post-Brexit slump. With continued growth in the aforementioned out of home market, mobile rising by almost 53% year on year and more growth predicted, the immediate future looks bright for the industry.

John Kehoe is managing director of Media Agency Group

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