So, let’s summarise the last fortnight: we now know Article 50 is to be triggered this Wednesday; the FBI is investigating Russian interference in the US election [unless it’s ‘fake news’ I’ve been reading]; Nicola Sturgeon (and possibly the Scottish people) want another referendum; unemployment is at a 32-year low (was it trying to get one up on the pound’s recent 31-year low against the dollar?); and both UK M&A and the FTSE are at an all-time high. Phew.
It’s hard enough to process this macro-economic potpourri watching the 10 o’clock news, so what on earth do financial directors and marketing directors in the UK’s top-spending brands make of it all?
The answer, of course, is that it varies. In the 4,000+ conversations our researchers have had with chief marketing officers and brand heads in the nine months since the Brexit vote, the full gamut of responses has been visible: “reduce spend to consolidate…”, “wait and see…”, “seize the day…!”
But encouragingly, so far in 2017 I’ve observed a huge amount of resilience in terms of how they’re approaching their spending plans– beyond what most commentators and economic soothsayers forecasted. Big ticket reviews have thus far remained stable, and we anticipate this will increase in the next six months.
Automotive – new vehicle demand outweighs tariff troubles…
Many think that the UK’s exit from the EU will cause significant problems for the automotive sector, but remember that this is an industry already reeling from last year’s emissions scandal and a seemingly never-ending series of recalls for everything from faulty airbags to spontaneously combusting engines.
In fact, UK automotive manufacturing is at a 17-year high (and new car sales at a 12-year one), and Toyota’s decision to invest £240m in UK production suggests that worries over future trade tariffs are unlikely to prove insurmountable. The sector also seems to – finally – be making progress on building affordable, appealing, electric/hybrid cars.
So far this year, we’ve interviewed marketers at Mercedes, Land Rover, Infiniti, Bentley, VW, Mazda, Honda and BMW – all of whom have stated a level of positivity over UK advertising investment and a particular effort to boost brand loyalty and spend heavily on experiential to help bring their brands closer to clients. While a couple of major incumbent reviews have already taken place in this sector in 2017, we’re expecting this to gather pace in the second half of the year and beyond. In fact, there are already 28% more in our Review Diary than there were this time last year.
Financial Services – the City of London’s draw will remain…
“We’ll be the new financial capital of Europe!” cried Frankfurt, Paris and Rome. And while some banks responded with noncommittal suggestions that bit-part divisions were being primed for relocation, the financial services sector has a canny knack of bowing to the demands of its top talent. And my bet is that will be to stay in London.
One reason for this is that war-chests hoarded since the recession are finally being dipped into to hoover up rivals in a long-overdue, London-centric M&A boom: Alliance Trust sold off a unit to Liontrust before Christmas, with their marketer telling us of a plan to refocus efforts on high-net-worth audiences. Those targeting ‘regular’ consumers like Virgin Money and TSB have told us of plans to build consumer brand equity in a sector increasingly encroached on by challengers like Monzo and Atom Bank – something for brand consultancies to pay particular attention to, I would suggest.
FMCG – Still the best source of opportunities…
After what seems like decades of price wars in the supermarkets – punctuated by Aldi and Waitrose battling over the notion of ‘value’ among different consumer segments – sterling’s weakness is now pushing brands’ ability to keep discounting to breaking point. And already, we’re seeing Marketing Directors looking to hire new agencies to support this drive for differentiation. With commoditised digital services and AdTech increasingly being outsourced to lower-cost European developers, it’s strategy- and design-led expertise where UK agencies will flourish this year (we’ve already uncovered twice as many market research/strategic briefs, for example).
What’s certain is that this time next year we’ll all look back and reflect on those sectors that outperformed in 2017 and those that disappointed. No-one can say for sure which ones these will be, but I’d advocate a level of proactivity, positivity and energy in your new business outreach that reflects the surprising resilience of marketing budgets that we’ve been discussing with brands over the last nine months. In the meantime, you can examine the marketing disciplines up for review in the financial, FMCG and automotive sectors here.
Mike Thorne is commercial director at Pearlfinders