Industry calls for Brexit 'Plan B' as budget growth stalls

The marketing industry is calling on the Government to draw up a “Plan B” following Parliament’s rejection of the Brexit deal, amid new figures which show that political and economic uncertainty have hit marketing budget growth.
Both the Advertising Association and the DMA are urging the Government to come up with a viable alternative to reduce uncertainty for business and the UK as a whole.
DMA Group chief executive Chris Combemale said: “In the wake of the no vote in Parliament, it is imperative that the Government formulates a Plan B and avoid a no-deal Brexit at all costs.
“A no-deal would create severe uncertainty for the data and marketing sector and could potentially bring data flows from the EU to the UK to a halt. This would have further knock-on effects on the UK public, with jobs moving to the EU and investment also decreasing.”
Advertising Association chief executive Stephen Woodford added: “A no-deal Brexit is hugely concerning for the UK advertising industry. We would rather have no-deal taken off the table, given its potentially huge disruptive nature.
“Our position is that there are three essentials the Government must negotiate as a minimum for the advertising industry: continued cross-border data flows; plurality of broadcasting channels to carry cross-border advertising; and a flexible migration system that allows continued access to the best talent.
“The choices we make over the coming weeks will determine our post-Brexit success. The Advertising Association will continue to advocate the best deal and outcome possible from Brexit to ensure the UK remains the world’s advertising hub.”
The calls come as the latest IPA Bellwether Report shows that the six-year run of continuous UK marketing budget growth came to an abrupt halt in the fourth quarter of 2018.
While some marketers reported growth (+16%), this was offset by others observing spending cuts (-16%), with a net balance of +0.0% of marketing executives signalling no change in budgets during the fourth quarter. The last time the report showed marketing budgets were not in growth was in Q3 2012.
The shift towards digital advertising remained apparent during Q4, although growth moderated noticeably, as signalled by the net balance for Internet falling to +2.1%, from +13.6% in the third quarter.
However, it was budgets for sales promotions that enjoyed the greatest upward revisions, with the net balance increasing to +3.8% from +0.6% in Q3. Events budgets also saw a slight increase (net balance of +2.6% from -1.1%), however, panellists observed cuts to the remaining categories monitored by the Bellwether survey.
The first downward revision for two quarters was seen for main media advertising, which includes large-scale campaigns on TV and in newspapers. The net balance fell to -6.5% from +4.8%. Direct marketing (-5.6% from -7.4%), market research (-4.7% from – 3.7%), and PR budgets (-4.1% from +4.2%) were also areas of marketing that companies experienced a squeeze on spending.
Joe Hayes, economist at IHS Markit and author of the Bellwether Report, said: “The slowdown in marketing budget growth seen in recent quarters culminated in Q4, as the six-year bull run came to an end.
“Company-wide indecisiveness restricted the allocation of resources to marketers, as the wait-and-see approach to how the Brexit process will transpire appears to be the current strategy in place for many UK businesses.
“The neutral stance on marketing budgets came in tandem with a first pessimistic outlook by businesses towards their own companies’ financial prospects for the first time since 2012, suggesting that top-level belt-tightening and plans to protect margins has seen marketing executives be given less discretion. Indeed, provisional data for budgets for the coming 2019/20 financial year indicate that downbeat stance seems likely to persist.”