The UK will be plunged into its first advertising recession in a decade in the event of a no-deal Brexit, with spending likely to fall by more than £1.4bn this year alone, according to a report.
Enders Analysis has modelled the impact of two scenarios on the UK’s £23bn advertising and marketing industry, based on an “orderly withdrawal” and a no-deal outcome.
If the UK leaves without a deal, spending will decline by 3% this year to £22.54bn, the first annual recession since 2009 when the sector plunged by 13%. This means that £1.36bn in advertising and marketing spend will disappear from the market.
If a deal can be struck, the report forecasts the total spend on UK media – from TV and newspapers to online, radio and billboards – will rise by 2.7% to £23.9bn. This would still be down on 2018’s 4.7% growth.
“The advertiser response [to a no-deal Brexit] will be to become more tactical in allocating advertising spend,” said Matti Littunen, a senior research analyst at Enders.
The worst-hit area would be display advertising – including TV, newspapers and their websites, outdoor sites such as billboards and on buses, on radio and online – which will be stripped of almost £1bn in a no-deal scenario compared with how it would fare under the orderly withdrawal model.
Television advertising, including spending on catch-up services such as ITV Hub and All4, is expected to fall by more than 9% in the event of a no-deal Brexit – a drop of almost £500m on the £5.1bn spent on TV last year. TV advertising is still expected to fall even if there is a Brexit deal, but only by 2.9%.
“As a first indicator of 2019’s fortunes the first quarter looks dismal [for TV advertising],” said Littunen.
The Enders report says that even hitherto unstoppable growth in the spend in online display advertising, such as on Facebook and YouTube, would stagnate in the case of no deal. Even in the much more severe ad recession of 2009, when the market shrank by 13%, online advertising remained resilient.
“Unlike in 2008-09, online display growth would almost completely stall,” said Littunen. “However, with declines across all other media, on a relative basis the shift [of ad spend] online would accelerate. Search advertising would be less affected.”