If the UK follows through with its decision to leave the European Union, industry experts say London won’t lose its throne as the epicenter of European advertising. It will, however, have to adjust as the world transacts differently with the British media market.
The country is expected to invest twice as much in digital media in 2019 as France, Germany, Italy and Spain combined, said Jon Webb, managing partner of WPP-owned consultancy Gain Theory. (WPP is the world’s largest holding company and is based in London.)
“The conditions that make London a center for all forms of advertising are still there,” Webb explained. “Experienced, well-trained, innovative, flexible and inventive staff, excellent production facilities and, of course, all the benefits of being in the top-ranked European cities.”
The weakening pound may even play in favor of UK-based agencies by making it cheaper for US and Asian companies to do business with them, said Andrew Shebbeare, chief product officer at Essence.
“London agencies and staff look 10% cheaper to US and Asian businesses than they were a week ago,” he said. “The weak pound will act in favor of UK exporters, including agencies serving global clients.”
While cities like Paris (home of holding companies Publicis Groupe and Havas) and ad tech hotbeds like Berlin could potentially replace London as the EU’s media hub, complex labor laws could deter media companies from moving, said Gareth Davies, CEO of London-based cross-device mapping company Adbrain.
“They are such unique markets that are islands in their own right, whereas Britain is so open, diverse and English-speaking,” he said. “I still think US companies will expand into the UK first, but it might change the makeup of their teams. They may send fewer resources here.”
But Shebbeare noted that media companies may spread talent and resources more evenly across Europe. He and other executives agreed that immigration limits stemming from the decision would lead to a talent drain from London.
“I find it difficult to imagine any single European city stealing London’s leading position in marketing, not least given language and cultural barriers and the breadth and depth of talent based in our capital,” Shebbeare said. “However, it does seem reasonable to expect some businesses to shift to more locally managed operations. … All major European capitals will see some business shift from London.”
Adbrain’s Davies wondered if talent from continental Europe would be less likely to move to London: “They’ll say, ‘Why don’t I move to Paris or Berlin, where I’m not concerned about the future of my immigration status and where I’m welcome?’”
And international talent who already live and work in the UK may choose to move elsewhere to avoid uncertainties. With less talent, VC funding is harder to come by.
If the UK approaches immigration and market access in a more open way, as Scandinavia does, the impact on advertising may be “fairly muted,” Shebbeare said. “On the other hand, a new and draconian immigration policy could threaten the UK’s creative industries.”
