The mood would have been edgy at Ad Week even without the “techlash” against giants such as Facebook.
Brexit continues to be a worry for the UK’s £22 billion-a-year ad industry, which has prospered as an international hub inside the European Union.
Matt Scheckner, the American who founded Ad Week in New York and set up the European version in London in 2013, is bullish about the UK but thinks economic “turbulence” will persist until a deal is reached with the EU. “Business likes certainty,” he says. “It’s fair to say the seatbelt sign is still on.”
Most UK ad chiefs wanted to stay in the EU and would like to keep borders open in a post-Brexit world to guarantee the flow of talent and business.
No wonder, when the UK’s export of advertising services has more than doubled since 2009 to hit a record £5.8 billion in 2016, according to an Advertising Association analysis of data from the Office for National Statistics this week. Advertising exports surged 35% in the year of the Brexit vote — an irony that is not lost on Stephen Woodford, the association’s chief executive.
He believes all the factors that make the UK a global hub for creative industries — the talent base, our culture and history, the City, the high levels of broadband and smartphone adoption, the timezone, the links to the EU — came together to accelerate growth.
“We have benefited from this virtuous circle of being a magnet for talent which attracts the business which attracts the talent,” Woodford says.
He thinks advertising exports will have grown again in 2017 and is hopeful that can continue, so long as the UK gets a good deal on immigration with the EU.
Some companies with international clients aren’t waiting to find out. Total Media, an independent agency in London, announced this week that it is opening an office in Munich in a joint venture with a German agency because of “uncertainty” about Brexit.
As well as digital advertising and Brexit, the ad industry is fretting about a third issue — the future of the agency business model, which has been the subject of several panel discussions at Ad Week. Agency groups such as WPP and Publicis Groupe are facing multiple challenges. Advertisers have been demanding greater transparency about pricing and want to reduce the number of agencies that they use as they tackle bigger problems such as digital disruption and the rise of ecommerce.
Unilever, owner of Dove and Marmite, says it is faster and 30% cheaper to create its own digital advertising in-house, rather than use external agencies.
Still, agency groups are adept at changing. Publicis Groupe’s new boss, Arthur Sadoun, hosted an investor day in Saatchi & Saatchi’s offices yesterday where he pushed “the Power of One” — his strategy of selling clients a range of services, from creative and media to data and consulting, under one roof.
The fact that Sadoun invited shareholders in his French company to London was a vote of confidence in the UK. Advertising Week Europe matters for the same reason. As one London ad chief says, if the festival moved to Paris or Amsterdam, there would be uproar.
For our ad industry to remain strong, the UK needs to look after a sector that can drive not only economic growth but also soft power around the world.
