Three months on from the UK’s vote on 23 June to leave the European Union, the business world remains in a state of limbo. The Government has yet to activate Article 50 – the legal mechanism that would facilitate Brexit – and has failed to set a formal timetable for negotiations with the EU. Instead, politicians continue to argue over exactly what the settlement should entail or whether the referendum result is legally binding.
In this context, marketers are left with a contradictory set of factors to consider. The ‘Brexitgeddon’ economic catastrophe that many analysts predicted has so far failed to materialise, with early indicators showing resilience and even growth in some areas.
A Confederation of British Industry survey last month showed exports increasing to their highest level in two years, as manufacturers took advantage of the falling pound to boost their output. Consumer confidence also bounced back in the GfK index for August, with shoppers’ propensity to make major purchases rising by nine points to +7. British supermarkets, meanwhile, recorded sales growth of 0.3% in the 12 weeks to 14 August – their best performance since March – according to Kantar Worldpanel.
But despite these positive signs there are also deep-rooted problems with productivity, low wage levels and the possibility of high inflation, following the drop in sterling. It is too early to say whether the initial post-Brexit resilience will last, and plenty of large companies are adjusting their strategies to deal with the ongoing uncertainty.
“[Marketing is] more important than ever [post-Brexit],”
Peter Duffy, commercial director, easyJet
Speaking to Marketing Week at the launch of a new advertising campaign last week, easyJet’s commercial director Peter Duffy argued that marketing is “more important than ever” in the wake of Brexit. The budget airline’s ‘Why Not?’ campaign, which encourages people to take more trips to Europe, is a deliberate attempt to inspire consumer confidence with feel-good messaging that it hopes will “begin to stimulate the market again”.
Following the Brexit vote, easyJet forecast its revenues per seat will be at least 5% lower in the second half of 2016 compared with last year. Although Duffy believes it is too early to know the full impact of the decision, he says easyJet remains committed to the UK. “We don’t see anything changing in terms of this being the most important growth market [for] the company,” he states. The comments follow reports that easyJet was planning to move its headquarters out of the UK because of Brexit – a claim it has denied.
EasyJet’s Irish rival Ryanair has been more forthright about its post-Brexit plans. In a trading statement following the vote, the company said it would “pivot growth away from UK airports and focus more on growing at our EU airports over the next two years”. Chief executive Michael O’Leary says Ryanair expects to transport five million fewer passengers to and from the UK next year as a result of the referendum decision.
Research from consultancy Benenson Strategy Group (BSG) finds brands’ immediate response to Brexit has had a direct impact on how consumers perceive them.
In a statement following the decision to leave the EU, car maker Jaguar Land Rover said: “We are a British business with a strong manufacturing base in this country, we call Britain home and we remain committed to all our manufacturing sites and investment decisions.” The BSG study of 1,000 UK adults finds 40% of people feel more favourable towards Jaguar Land Rover as a result, while 5% feel less favourable and 47% say it has not altered their opinion.
By contrast, Japanese car manufacturer Nissan refused to offer assurances about the long-term future of its Sunderland plant following the Brexit vote and as a result only 8% feel more favourable about the brand and 18% feel less favourable. However, most respondents (63%) say this stance has not altered their opinion of Nissan.
The marketing profession is also gripped by a sense of paralysis in the wake of the EU referendum. After the vote, advertising trade body the IPA downgraded its Bellwether ad spend forecast from growth of 3.3% in 2016 and 2.7% in 2017 to predicted declines of 0.2% and 1.3% respectively.
It is too early to see whether this trend is playing out, with the IPA’s next set of figures due on 12 October, but there are indications that Brexit has sabotaged certain marketing pitches. IPA director-general Paul Bainsfair says: “There are no signs that Brexit has had any effect on procurement but there is some anecdotal evidence coming through that some Europe-wide pitches have been postponed.”
He adds that certain agencies were fearful in the immediate aftermath of the vote “that the UK will not be such a dominant control and command centre for European campaigns post-full Brexit”. However, Bainsfair believes this concern “seems to have waned as people get more used to the idea”. There is also no evidence, he says, that UK agencies are planning to relocate away from the country as a consequence of Brexit.
“Recessions set the tone for much longer than they actually last, so doing well at times of hardship leads to rewards in the longer term.”
Richard Herbert, global insight director, Europanel
Richard Herbert, global insight director at research group Europanel, believes Brexit presents a big opportunity for brands and advertisers, even if it ultimately leads to an economic downturn. “Although potential cuts to marketing and research and development budgets may loom, our data shows brands that do best will be those that hold their nerve and invest counter-cyclically,” he explains. “People always need FMCG products – and volumes don’t tend to reduce much during recessions – it’s just what people are buying that shifts.”
Europanel data finds that of the 25 brands that increased their UK market share the most during the 2008-2010 recession, 18 still have a higher share now. This includes Hellmann’s, Fairy Liquid, Pepsi and Wilkinson Sword. “Recessions set the tone for much longer than they actually last, so doing well at times of hardship leads to rewards in the longer term,” says Herbert.
The Financial Times is one brand seeking to prosper following Brexit. The media business reports a 600% increase in digital subscriptions sales in the weekend following the referendum and says it “continued to break records in the days and weeks that followed”.
— Financial Times (@FT) June 24, 2016
The FT made all of its Brexit related content free to read in the week leading up to the vote so it could engage with the surging numbers of non-subscribers who turned to the brand for news and guidance. Its Brexit Poll Tracker, for example, became its most popular piece of content ever, receiving almost four million views.
In addition, the FT developed a dedicated brand campaign around Brexit using the slogan ‘A Star is Torn’. This creative was promoted through social media, in retail outlets, digital out-of-home spots around London, taxis travelling through the City and at FT brand events such as the Chicago Forum on Global Affairs. The company reports the campaign generated 800,000 impressions, 50,000 video views and more than 1,000 requests for discount retail vouchers for the FT and FT Weekend.
Senior vice-president of communications and marketing Darcy Keller believes that by reacting at speed across all its marketing functions, the FT was able to take advantage of the increased interest in its brand. “Both before and in the aftermath of the Brexit vote, departments around the FT – from brand and B2C marketing, to audience engagement, conferences and more – all mobilised quickly and worked together to get a strong, unified message out,” says Keller. “The results show how effective this work was.”
For more on how Britain fare post-Brexit attend the ‘Brand Britain – What does it mean now?’ session at the Festival of Marketing, which is running on 5 and 6 October at Tobacco Dock, London. For more information about the event, including how to book tickets, click here.