It is impossible to overestimate the potential effect of the recent Brexit vote on the ad industry in Europe. London has long been the center of the media industry, and the UK area is a market with the third highest digital ad spend in the world. (Interestingly, Asia-Pacific has replaced North America this year as first, driven by the huge potential market in China.)
Thus as the UK economy grinds to a temporary halt, beset by a revolving door of politicians, citizen protests in London against the Brexit, and a currency that grows weaker by the day, people in the ad agency business are aware that they’ll feel some pain. They just can’t tell how much.
One of the secrets of the London ad industry is that innovation happens when brands nurture marketing startups through accelerators like the marketing and advertising accelerator Collider, which recruits new ideas from startups all over Europe and puts them in touch with brands. Collider’s founder admits concern about attracting the best martech startups to London if the current freedom of movement from Europe to the UK is curtailed by the Brexit.
Another issue is whether the projected digital ad spend growth for this year, projected to be up 8% to $12.88bn, will hold as trepidation makes businesses more conservative. The UK also spends more per capita than other countries in the top ten markets, topping the list at $201.
Ad spend of that size creates knock-on effects like job growth and office leases. 360i, for example, just tripled its space in London to 11,000 sq.ft, and expanded its staff to 90.
“The uncertainty is a huge problem,” said Nick Thomas, practice leader, digital media at consultancy firm Ovum. “Investors, advertisers and consumers don’t want to open their wallets, so it’s done huge damage already to the whole value chain.”
Thomas pointed out this uncertainty could make it tougher for newer forms and formats in media and advertising, as people will be more risk averse.
Most serious of all, however, is the feeling marketing people in London have that they are completely out of touch with the people they are selling to. London voted almost overwhelmingly to Remain, while outlying areas voted to leave the UK.
“When you’re in the business of selling to those people, you can’t help but ask, ‘How come we’ve got it so wrong?’” added Thomas. “Anyone in the information industry should be asking himself, ‘Do we understand this country anymore?’ There’s this grievance against an out-of-touch metropolitan elite. That should give us pause for thought.”