In the end, perhaps it was an anti-climax. For three years those in the advertising industry has been tying itself in knots about what Brexit would mean for them and their clients. Certainly the fear of a no-deal departure from the European Union loomed large. Until the dying days of 2020, advertisers and marketers were kept waiting. Finally, a deal was struck: not perhaps the one the industry wanted, but a welcome arrival nonetheless.
Now the dust is settling and we are learning what it means to be outside the EU competitively, culturally and geographically. There are bound to be teething problems and early 2021 provided plenty of those, from questions over shellfish exports to an uproar over visas for travelling performers. These are not insignificant challenges and there will need to be months – perhaps even years – of negotiation to find solutions that work for all parties.
The ad sector is also impatiently waiting to see what the long-reaching impacts of Brexit will be. From the aforementioned visa issue that makes cross-border production more complex than before, to adhering to now unfamiliar regulations there is much to learn and much to do.
The end is just the beginning
The Advertising Association’s director of policy research, Konrad Shek, has been one of the industry’s most vocal commentators on the potential effects on Brexit, and the association has done much since the result of the referendum to advise and update its members. This included a trade advertising campaign launched in late 2019.
The push was funded by the Government’s Brexit Business Readiness Fund, and followed AA research that showed in September 2019 just 23% of its members polled felt even moderately prepared for Brexit.
He says: “I think there was a collective sigh of relief in UK advertising that a deal was struck with the UK and EU, not least because it avoided a chaotic no deal scenario.”
It’s a common refrain. Advertising executives have, as one, lauded the end of one sort of uncertainty, although they await the ultimate implications.
Luke Judge, CEO at digital specialist Incubeta UK and US, says: “At last, at least, we knew what the goal posts were and although the devil will be in the detail so far it appears that the effects will be minimal, in the short term at least – although many of our clients face some logistics or supply chain issues.
“That’s not to say that behind the scenes in the run-up to a potential ‘no deal’ Brexit we were complacent. For instance, we created our international advertising campaigns separately to the UK accounts, ready to be adjusted or even paused on short notice if required.”
This, he adds, is similar to how the agency has helped clients through Covid “which has in the past 12 months changed the industry and our clients’ businesses far more than the Europe schism.” Equally, the uncertainty over the US elections and macro changes such as regulatory and technology changes on advertising measurement and targeting have all kept adland busy.
This could all have been a very different scenario. As Jason Cobbold, CEO of BMB London, suggests: Covid has changed the conversation. “Without the pandemic having such a shattering effect across the globe, we would be looking at a very different Brexit,” he says.
“The co-existence of two crises arguably makes one more palatable than the other. Certainly the Covid crisis has helped mitigate some of the fears there were around Brexit.”
As Rania Robinson, CEO and partner of ad agency Quiet Storm, says: “The deal has moved the dial from the ‘unknown’ unknown to the ‘known’ unknown.
“Although there’s still quite a bit of uncertainty around what the deal actually means in practice and there have been some challenges particularly with import and export admin and red tape, the uncertainty around a no deal would have been far more debilitating than a less than ideal outcome around a specified deal.”
Keeping key pillars intact
Eighteen months ago, the industry was fearing implications for advertising across key areas including data, trade and talent. Much of this has been assuaged, according to Shek, although questions remain.
He says: “Because the deal was complex and agreed so late I think many companies are still trying to digest its implications. Whilst the provision of services in the deal look quite promising, in practical terms these are somewhat limited because of the reservations held by individual EU Member States.”
These reservations are basically opt-outs from certain parts of the agreement. Hence, he suggests, it is important to check host state rules to see if there are any specific restrictions when doing business there, especially if the UK company does not have an establishment in the EU or European Economic Area (EEA).
“Going forward advertising companies will have to be flexible regarding their structures and/or potentially adapt to a country by country approach when doing business in the EU/EEA,” he advises.
Little has changed on the data front so far. The European Union’s General Data Protection Regulation has been codified into British law as the UK GDPR, although companies which transfer personal data between the UK and EU will need to make sure they’re still able to do so. The IAB also advises that companies which handle personal data should make sure they have categorised which data belongs to UK citizens and which belongs to EU citizens, ahead of the UK creating its own set of personal data safeguards.
Talent was also critical fear factor for the industry – could it still attract the best and brightest? Cobbold believes so, particularly as new, more remote ways of working are becoming the norm. “I can still get the best problem solver from Madrid, and that’s great,” he says.
Luke Knight, founder of customer marketing agency Prospect Knight is a little more circumspect. He say: “Recruitment will naturally be different in the longer term, but we’ll always want the very best talent so will have to make do with any new restrictions, such as visa issues, that arise.”
Quiet Storm’s Robinson points out that access to talent could even become easier, with a more global pool, as most advertising executives should meet new mooted points-based criteria, such as expertise, salary and so on.
It’s a far cry from the potential crisis faced in the care sector, she adds, which are traditionally poorly paid. Her agency launched a campaign for the Women’s Equality Party highlighting how Brexit had driven the NHS and social care to “breaking point” with thousands of EU nurses leaving.
But not so for advertising. In fact, at the joint ad bodies’ Reset 2021 conference this year, culture minister Oliver Dowden was at pains to point out that the industry “almost more than any other sector” can turbocharge the post-Brexit, post-Covid economy. “It is one of the reasons why we felt it was so important to secure work permit exemptions for advertising and other industries in our deal with the EU,” he said.
Incubeta’s Judge believes that for him, and for other network agencies, recruitment – and new business – may even prove easier. “We’re lucky to easily tap in to great talent across EU markets because of our European office network and Covid has helped us realise that we can hire people with the right expertise irrespective of location and proximity to our London office.”
He even believes it could give the networks an edge in being able to attract new pan-European business against “rivals who might struggle to compete for those client requirements”.
Communication is the easy bit, transacting is harder
All the executives interviewed expect that the biggest issues in the short term will lie with their clients, and the ability to import and export easily. Bottlenecks have already happened with the British Chambers of Commerce reporting in February 2021 that almost half (49%) of UK-exporters had suffered problems. Brits buying from EU websites have been hit with customs bills of up to £100 despite previous assurances from Prime Minister Boris Johnson that there would be tariff-free trade.
Knight further adds that some clients are pulling back ad spend abroad due to the additional VAT due diligence that’s now needed. “It’s a lot more work as you have to break down sales and therefore VAT by country, so for the smaller brands this can be a massive resource, so for in the short term at least they’ll stop marketing there.”
Robinson concurs: “If our clients are experiencing issues around trading and are having to add cost to goods, this will have an adverse impact on consumer spending and brand choices. The brands who are able to maintain a good quality product or service without adding cost or complexity to the consumer could win out here and this will impact on agencies, depending on their client portfolios and so on.”
Another longer term factor for Cobbold will be if UK-based businesses relocate to the EU, as Unilever had mooted and as PaddyPower (to Dublin) has already done. “You tend to get ecosystems and clusters around HQs, including advertising and marketing support services. It will be interesting to see, when the dust settles how companies reorganise their central European gravities, be they governance, legal or operational.”
He remains confident that Britain, and London in particular, will retain its place as Europe’s major advertising hub. “London’s biggest strength is its sense of openness and plurality – I don’t see that changing. When you look at the big creative centres such as London or Amsterdam in Europe, they are full of interesting creative subcultures and naturally become places where clients, marketers and creatives want to be.”
Judge strikes a positive last note: “Moving forwards, I have limited hopes or fears for how Brexit will pan out for us or the wider industry – and who could have predicted that three years, or even 12 months ago?”
Featured image: retrorocket / Shutterstock.com
