By Mick Style, CEO at Wavemaker North

Where we are.

The last few weeks have seen a slew of reports pertinent to the impact of Brexit on corporates and advertising.

January consumer confidence was flat, including the still positive metric for now being a good time to make a major purchase. Timed for Davos was PwC’s survey of global CEOs showing a worldwide decline in corporate confidence year on year. These declines were as marked in Western Europe as they were in the US.

Prior to that was the Q4 2018 IPA Bellwether report. Much closer to home in both its UK remit and advertising focus, it reported declining perceptions of future financial prospects for advertisers and a likely relative shift away from longer-term strategies such as brand building to shorter-term tactics, such as sales promotion.

The IPA Bellwether was hot on the heels of an Enders Analysis report for 2019 advertising spend suggesting that an orderly Brexit year would enjoy only modest growth in ad spend (2.7% 2019 versus 4.7% 2018), and a no-deal Brexit would closely follow economic forecasters’ no-deal projections for GDP – i.e. a near 3% decline year-on-year.

Between them, they reflect the implications of uncertainty writ large, with Brexit dominant at home but geo-politics, the emergent challenges of cyber-security and US-China trade tensions bearing down prominently elsewhere.

Where we really are.

As ever, it pays to look beyond the headlines.

  • Ever more emotional than rational, UK consumers see the general economy getting worse but their personal financial circumstances getting better.
  • As with our more domestic lack of consensus on Brexit policy, PwC report an increase in CEOs taking a position – it’s either going to be good or bad for us; it’s definitely not going to be business as usual.
  • In their central (orderly Brexit) scenario, ad growth is still ahead of GDP as the universe of advertisers continues to grow. Even in the no-deal scenario traditionally non-media marketing budgets, such as trade promotion and merchandising spends, are increasingly moving to online advertising – trends that would continue in a no-deal scenario.
  • Using the 2008-9 recession as a comparison point, Enders note that any no-deal related downturn could lead to consumer retrenchment on big ticket items but also create opportunities (in-home experiences, occasional luxuries being examples from 2008/09). We might also expect greater levels of pre-purchase research, suggesting more media-intensive active stage opportunity for advertiser engagement.
  • Finally, they note that a downturn is unlikely to be evenly distributed – some consumers will be far more resilient than others.
  • Both Enders and the IPA Bellwether refresh well understood arguments for the enduring value of brand-building activity, for which the 2008/09 recession provides a fresh set of evidence. “Going dark” with brand display spend can be a long-lasting mistake.
  • The hard reality is that we can expect much volatility in some display media markets, as pricing follows demand and demand is unusually difficult to predict. Building flexibility into plans to allow responsiveness to the infolding story of Brexit will mitigate much risk