Reviled and respected in equal measure, advertising and Brexit have a lot in common. Both are battles between heart and head, emotion and concept, right and left.
Tuesday night’s vote on Theresa May’s Brexit deal attests to this polarisation, and consequently it creates more uncertainty, more division.
Nobody knows what they want, and that’s a problem for the advertising sector. Brexit’s ‘will they/won’t they’ nature halted the UK’s six-year ad budget growth, according to the latest (and scarily well-timed) IPA Bellwether report. Similarly, modelling by Enders Analysis forecasts a 3% downturn in UK ad industry spend in the event of a no deal Brexit. That equates to around £1.4bn.
It’s not looking too rosy.
You can’t stick your fingers in your ears and dissociate yourself, because it affects everyone. Despite the inevitable flurry of ifs and buts emerging from Westminster, there are three ways in which the spectre of a no-deal Brexit will impact the UK ad industry.
Fulfilment becomes wish fulfilment
UK advertisers are naturally exposed to international work on the worldwide market, within the EU and beyond. The UK does a lot of work abroad. At Artefact, around half of our staff are from outside the UK, and 40% of the investment we make for our UK clients is in media outside the UK.
In theory, a no-deal outcome wouldn’t impede us placing ads for our clients in EU countries. But it might affect our clients’ ability to fulfill the EU leads we bring them, especially if those lorries do get stuck at Dover and delivery is disrupted. If they can’t fulfill, then what’s the point in investing in German Google Ads?
The international presence of UK business will be tested
You can’t credibly offer to help advertisers develop a marketing strategy in Spain without native Spanish speakers (a GCSE qualification doesn’t count). If freedom of movement ends, then we have a significant recruitment problem.
And the same goes the other way. Artefact is a French business that expanded into the UK last year. Bright, hungry talent might be put off coming to the UK, for a job at Artefact or another agency, and that restricts our pool of talent. This is both limiting and rather sad.
That’s why, for advertising - and many other sectors - a Norway-style model would probably be the best possible outcome. It would provide certainty and help maintain freedom of movement. From a recruitment standpoint, that’s vital for many businesses.
Whether this will be possible is an entirely different matter, especially given the extent to which immigration has become a campaign issue during and after the referendum.
Advertising is intrinsically linked to economic cycles, and this is no different
It’s always been the case. When GDP rises, so does ad spend. When it slumps, so does ad spend. An economic downturn following no-deal will definitely affect discretionary advertising investment.
Performance media is a little more insulated than other advertising formats. We operate to cost of sale, so often we pay for ourselves. When it comes to broadcast TV, clients are making a capital investment for long-term growth. But it’s not as instantly measurable, so a no-deal set-up might spell trouble there.
But it’s all a big ‘if’ at the moment.
Realistically, the Norway option is what many advertisers and their agencies will be hoping for. It might not be the best for Britain, in the sense that we’d lose our ability to influence certain regulations. But it’d provide certainty and get us what we need.
It’s not looking too rosy.
That bears repeating.
It’s all bringing me back to my days as a media buyer. From that perspective, May didn’t have a great hand, but she didn’t play it all that well either. It seems that the EU has rallied together and left Britain - the UK, actually - more fractured than it was before.
This lack of leverage means unless something changes, we can’t have our cake nor can we eat it.
Especially if the bakery’s in Brussels.
Tom Cijffers is the UK chief executive of Artefact