In June, the UK voted to leave the European Union. While the split hasn’t officially taken place—government will negotiate terms with the EU over the next two years—the decision has already impacted the country’s economy and, in turn, its advertising industry.
Since the summer, advertisers have had a tough time securing clients outside of the UK. According to a survey by the Advertising Association, 22 percent of agencies have already lost contracts, and 62 percent believe the vote has “negatively impacted” their business expectations.
Their budgets, however, tell a different story. As the Institute of Practitioners in Advertising (IPA) reported, there was a net balance increase of 13 percent in the number of companies raising their ad budgets in Q4 2016. (Net balance is the percentage of companies decreasing their budgets subtracted from the percentage of companies increasing their budgets.) And a net balance of 27.6 percent of companies upped their budgets in 2017.
The IPA does predict a drop in the middle of the year as Britain begins to negotiate its exit, and other expenses like housing prices continue to rise. But ad spend is still expected to increase by 0.7 percent in 2018, indicating overall growth despite the political strife. Marketers have continued to pump money into digital, mobile, SEO, search, and event advertising.
Perhaps this positive outlook is why Britain’s culture secretary, Karen Bradley, said advertisers will be “key to the UK’s post-Brexit success.” Without being burdened by the EU’s fees and regulations, companies could see more room for development and innovation. Due to the weak pound, they might also see a boom in purchases from foreign buyers.
As the Brexit details get worked out, nobody knows how the UK’s relationship with the rest of Europe will evolve. But when the political dust settles, the ad industry could have a big impact on tourism and the overall economy, shaping the way the world perceives the nation.