Advertising budgets have long proved to be the canary in the cage for GDP and consumer confidence. When the economy swings against us, corporations are quick to rein in one of the easiest costs to control. The upside to this is that we often benefit from an unspoken return in confidence before it appears elsewhere.
Unlike 2008, the financial system has not failed us and consumer demand is unlikely to falter in the short term, but even in the best of times advertising investment can be switched off or deferred without major penalty. And now that the path ahead is unclear, in the next six months advertisers are likely to invest less than if the vote had been to remain in the EU.
The degree to which advertisers will reduce their investment is hard to predict. What is more certain is that this reduction will not be uniform across media channels. TV advertising will suffer less than most because it’s planned two months in advance. Advertisers looking to be on air in September, for example, have to commit investment in the first week of July and are unlikely to amend this spend in light of a result that only arrived on June 24.
The outlook for print is less positive. Over the past five years, print media trading has become increasingly short-term and subject to whims of nervous chief marketing officers. Unlike 2008, newspapers cannot rely on increased investment from financial services clients who turned to print to rebuild trust in their institutions. This time around the banks have nothing to apologise for.
Like print, the mediums of radio, posters and cinema will be more vulnerable to ad cancellation. In terms of share of total ad spend, only digital is likely to prosper over the next six months as its sustained and structural growth is likely to be undimmed.
Perhaps the real impact of Brexit on the UK advertising industry will be on its people. The complexity of running a business half in/half out of the EU has yet to be realised, but what we do know is that European marketers have historically opted to have their pan-European accounts run out of London. If we lose our status as an ‘open’ city, or if the cost of doing business looks prohibitive compared to setting up in Paris, Amsterdam or Brussels, then the major holding companies will have no option but to serve their biggest clients from elsewhere. Furthermore, London agencies have a proud record of attracting talent from across the EU and beyond; even the simplest change in legislation could threaten this diversity.
Let’s end on the lessons learned from Brexit. In her latest column for Campaign, the magazine’s global editor in chief, Claire Beale, laments “the catastrophic failure of the communications industry to mount a coherent and powerful pro-EU message”. It could be the most expensive mistake we make, but it’s not the most damning…
We’re planners – we make our living from understanding people, yet we systematically misread the mood of the nation. The advertising community was far more shocked by the result of the referendum than it should have been. If anyone could have been a barometer for the popular vote it should have been us. The industry is making great strides in driving equality on the grounds of race and gender, but social and geographic mobility has to be added to this list if we’re to demonstrate any sort of affinity and understanding with people outside of our London bubble.