Ad market fears a repeat of 2008 with Brexit crisis
A view from Gideon Spanier

Ad market fears a repeat of 2008 with Brexit crisis

The advertising market is heading south after the Brexit vote. How far will it drop?

Take a look at how sterling and share prices plunged in the immediate aftermath of the referendum result and it’s easy to fear the worst.

Some brands are bound to defer decisions, new campaigns and product launches in this climate of uncertainty.

Media spend is easy to cut, even if experience shows that companies that keep investing in their brands in a downturn perform better.

That’s why some media buyers are talking privately about UK ad revenues sliding by up to 10% in the second half of the year. But that fear is a gut reaction, based partly on memories of 2008-2009.

Forecasting the market is guesswork at this early stage in the crisis and all of us, particularly those who talk about and report on this business, should be wary of talking down the market because it could become a self-fulfilling prophecy.

Few brands have pulled spend yet as everyone struggles to assess the situation. Typical was one leading consumer-goods company, which asked its agency for a fast-turnaround survey on consumer confidence in the wake of Brexit.

What happens to the ad market will play out over months, not weeks. Budgets for this year have largely been planned, so the real test is likely to be next year.

Group M, Britain’s biggest media buyer, has been among those keen to play down the threat of "economic catastrophe". Although it expects brands to "invest less" because of the uncertainty, it will be "a difference of degree, not magnitude".

Let’s not forget that the UK ad market has been one of the strongest in the developed world. It was growing at a rate of 5-6% until 23 June, and that follows six consecutive years of growth from 2010 onwards.

UK adspend is 13% higher in real terms than in 2008 and up 31% from the 2009 trough, according to Group M.

Optimists hope the UK government and the European Union might be able to reach an accommodation to maintain some of Britain’s links to the single market. In that case, advertising might hold up surprisingly well.

It helps to have historical and geographical perspective. The UK has not (yet) experienced a major currency collapse and the worst year on record for the UK ad market, 2009, saw an adspend drop of 12% – which was bad, but not dire.

However, the events of the past week have shown we are in uncharted territory.

gideon.spanier@haymarket.com

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