LONDON: As UK consumer confidence hits its lowest point in three years, agencies are increasingly concerned that their clients are preparing to pare back their spending in the wake of the uncertainty that has followed the country's vote to leave the EU.
Uncertainty tipped into incredulity yesterday when the leading proponent of Brexit who was widely tipped to become the new prime minster decided he wasn't the man for the job after all. This shortly after his right-hand man announced his own candidacy for the post with a devastating critique of his erstwhile colleague's leadership abilities. Meanwhile, the leader of the opposition remains under pressure from internal party opponents.
These political shenanigans are doing little to bolster consumer confidence. The latest YouGov/CEBR index showed a sharp fall between the first three weeks of June, when it stood at 111.9, and the week following the referendum, when it dropped to 104.3.
"[The scale of the decline] would suggest there has been some adjustment in attitudes towards Brexit over a short space of time," according to Scott Corfe, director at the Centre for Economics and Business Research.
"If the half that voted to leave still thought it was a good thing you would think consumer confidence would have held up better. That suggests a change of mood once they saw the short-term impacts," he told Marketing Week.
Paul Bainsfair, the director general at the Institute of Practitioners in Advertising, observed the difficulty of delivering any advice in such circumstances beyond 'wait and see' but thought that agencies would be most concerned that "projects will be held up, support for brands will not be at the level it would otherwise have been at and revenues will probably fall certainly in the rest of the year".
One straw for agencies to grasp at is the idea that brands could be better off spending more money on marketing. "It might sound perverse but actually if a business spent more in a downturn they could increase their market share plus the cost of advertising would be cheaper during that period," said Corfe.
And Jon Davie, chief executive of Zone, argued that Brexit could "accelerate the move toward digital in the medium term", thanks to the greater accountability it offers. "It will accelerate the shake out of what was already happening in traditional media," he told The Drum.
Data sourced from Marketing Week, The Drum, Financial Times; additional content by Warc staff