A UK vote to leave the European Union would have no immediate effect on advertising industry spending, new research suggests.
But media agency Zenith has claimed that a Brexit could cost the UK £70m in adspend growth a year, totalling around £1bn by 2030.
This figure is based on controversial Treasury research claiming that the UK’s GDP would be 6.2 per cent lower than otherwise expected in the event of a Brexit. The Treasury analysis was condemned as “absurd” by the Vote Leave campaign.
Zenith said the damage would be “caused by a reduction in economic growth in the long term, not by advertisers’ short-term reaction to a vote to leave, which is likely to be minimal”.
Zenith tracks the relationship between economic growth and the health of the advertising industry through its annual Advertising Expenditure Forecasts report. Over the past 35 years, it said the UK ad market has average 1.1 per cent growth for every one per cent rise in GDP.
Forecast aside, a Zenith survey of UK and European advertisers found budgets have not been revised in the run-up to the vote and would not be changed in the event of a Brexit.
“This suggests Brexit would have little to no immediate effect on the UK ad market,” Zenith said. “This is not necessarily a surprise: advertisers are generally pragmatic when setting their budgets, and they allocate what they estimate will be enough money to allow them to achieve their growth targets, given consumers’ spending habits and the options available for communicating with them.
“Brexit would be an unprecedented situation, and is unlikely to instantly change the way people shop or consume media, providing no signals for advertisers to vary their spending plans. We expect that advertisers would begin revising their advertising budgets, though, once the economic consequences of a vote to leave start to become clear.”
Jonathan Barnard, Zenith’s head of forecasting, added: “While the immediate effect would be muted, Brexit would have a long‐term cost for the UK ad industry, holding back its growth by £70 million a year… It would also threaten to make cross‐border accounts in Europe more costly and cumbersome to operate.”