Just yesterday, we learned that Downing Street has put forward a third possible model for handling customs after leaving the EU, to be discussed by senior ministers at Chequers this Friday – possibly inching us closer to an agreement on an issue central to Brexit, over which political leaders have been sharply divided.
Amidst the Brexit disputes and dilemmas, how prepared is the UK marketing industry for a future outside the EU?
A new report released today by Econsultancy, Navigating Brexit: A Provisional Guide for Marketers and HR, has revealed that a surprisingly slim percentage of marketing professionals have implemented, or are planning to implement, a strategy for Brexit.
Drawing on a comprehensive survey of more than 300 business leaders, marketers and HR professionals, the report reveals the marketing industry’s prevailing attitude towards Brexit, and explores the ways that marketers have adapted – or could adapt – their campaigns to address the UK’s split from the EU.
The report further gives a number of practical suggestions as to how marketing professionals can prepare for, and understand, the challenges that are likely to present themselves as the UK departs the European Union next year.
How are marketers preparing for Brexit? They… aren’t
Despite the fact that survey respondents and expert contributors to Navigating Brexit all regard Brexit as a clear strategic issue for businesses, the report notes, “this industry perspective has not filtered down into specific Brexit strategies implemented within marketing functions”.
Just 10% of survey respondents stated that they have implemented a Brexit marketing strategy. A further 29% reported that they have such a strategy in development, meaning that in total, less than two-fifths of marketing professionals either have put, or will put, a dedicated Brexit strategy into place.
However, not every organisation necessarily needs to implement a brand new “Brexit strategy” in order to be prepared. Econsultancy investigated whether marketers might instead have adapted, or be planning to adapt, their existing marketing strategies to account for Brexit.
Once again, the results came back largely negative. Fifty-eight percent of respondents replied that their organisation had not made any changes, nor was it planning to make changes, to existing marketing tactics in light of Brexit.
A quarter of respondents (25%) were unsure, while only 18% confirmed that yes, their organisation was either making or planning to make changes to its current marketing strategies to prepare for Brexit.
There is some evidence that marketers are better prepared for Brexit in sectors where its impact is most likely to be negative. A survey of Irish food and agricultural businesses that export to the UK, conducted by the Irish Food Board, found that 39% have a tailored marketing strategy for the UK market.
The survey also potentially hints at a reason for marketers’ apparent lack of preparation for Brexit: they are confident about the prospects for growth even after the UK leaves the EU – even in sectors which are most likely to see a negative impact.
“The Irish food sector is symptomatic of a broad confidence across marketers of future growth despite Brexit,” states the report. “80% of food exporters surveyed by the Irish Food Agency believe that the UK provides great future opportunities for growth.”
Responding to Brexit in marketing campaigns
Even if Brexit turns out not to significantly impact prospects for UK businesses, there’s no denying that the vote has markedly altered the social and political atmosphere of the country. As Econsultancy’s report notes,
The referendum debate and result clearly placed UK consumers into two polarised groups, ‘leavers’ and ‘remainers’, with differing attitudes to post-Brexit spending and UK economic health. … [I]t is clear that ideas of national identity and sense of place, that were debated during the referendum vote, can also influence how UK consumers think.
How have UK-based companies, or companies targeting a UK audience, used this to their advantage in marketing campaigns? Again, broadly speaking, the answer appears to be – they haven’t. When asked whether their organisation has run any marketing campaigns specifically in response to Brexit, just 17% of marketers replied in the affirmative.
However, the report cites some examples of successful campaigns which indicate that brands can see positive results by playing to feelings of national identity and pride.
For example, Nike’s recent “Nothing beats a Londoner” campaign, which ran from February 2018, drew on the diversity and dynamism of the city, as reflected through Nike’s product ranges.
While the campaign unfortunately ended up being withdrawn due to a trademark dispute over the abbreviation LDNR, it achieved a high volume of coverage and social engagement first, including a retweet from London Mayor Sadiq Khan.
— Sadiq Khan (@SadiqKhan) February 9, 2018
And last year, British luxury fashion brand Jigsaw won Marketing Week’s Campaign of the Year award with a campaign that drew on themes of national identity via an issue at the heart of the Brexit debate: immigration.
The campaign, entitled “Love Immigration”, set out to celebrate “British style” by celebrating the contributions made by other nationalities and ethnicities towards what we consider to be British fashion. To accompany the campaign, Jigsaw created a “Shop the Campaign” page which encouraged consumers to shop “beautiful materials from 16 countries, made by 45 nationalities”.
Speaking to Marketing Week about the campaign, Jigsaw’s Head of Marketing, Alex Kelly, stated that,
“There’s no question that immigration is a controversial issue in British politics right now, but if you risk making people potentially disagree with you, then I think it’s worth it as that still creates a powerful emotional engagement, so long as you have a right to talk to them in that environment.”
The success of these campaigns and others that play to British feelings of national pride, such as Ford UK’s “Together We Go Further” campaign and Universities UK’s “We Are International” campaign, suggests that marketers can afford to be direct in addressing the many issues stirred up by the Brexit debate, which are still front of mind two years later.
With that said, Econsultancy’s report cautions against making explicit references to Brexit itself in marketing material. “For organisations that do not perceive a major change in their competitiveness or customer behaviours, the risks of communicating about Brexit seemingly outweigh the potential rewards,” it writes. “Those that have launched marketing campaigns with an explicit link to Brexit are typically responding to major sector-specific impacts.”
In other words, it can pay to address issues linked to Brexit, but without making it too obvious that that’s what you’re doing.
Expert contributors to Navigating Brexit also advise against employing “Brexit gimmicks” such as incorporating significant Brexit milestones (like “Exit Day”) into marketing. Parry Malm, CEO of Phrasee, notes that the high volume of themed marketing campaigns tied to noteworthy events only succeeds in making consumers tune them out.
“One thing that email marketers seem to love is using any excuse to theme a campaign. Black Friday, Valentine’s Day – even National Pickle Day. What a lot of our research has shown, and the numbers back this up, is that often since people’s inboxes are overcrowded with these trend-seeking campaigns the individual effectiveness is reduced massively.
“We find that when people don’t follow those trends and they just focus on using the best language possible to maximise eye share, their emails are better.”
Five tips and takeaways for adapting to Brexit
Even for marketers who don’t intend to develop or adapt a Brexit-specific strategy, who have a positive outlook on Brexit, or who are operating in sectors unlikely to be negatively impacted by the UK’s departure from the EU, things are bound to change.
From currency fluctuations to growing concerns around transparency and accountability, there are a number of trends either linked to or exacerbated by Brexit which marketers will need to know how to navigate. Navigating Brexit contains a variety of actionable tips and pieces of advice for marketing professionals navigating the Brexit transition and everything that comes after it.
Here are five key takeaways.
1) Be aware of how political and social views impact purchase intent
As we’ve discussed, the EU referendum polarised consumers – or at least, those that took a stance – into two opposing groups, which can reveal a great deal about a person’s political, social and economic beliefs.
Divisive political events such as the EU referendum and the US presidential election have caused marketers to question how well they truly know their customer base, after all. In February 2017, a study conducted by UK agency Greenlight – which directly referenced Brexit and the election of President Trump – found that 66% of digital marketers questioned how well they knew their audience, while 94% said they intended to find new methods of understanding what consumers are looking for.
Econsultancy’s research found that just over a quarter of organisations had performed market research related to the impact of Brexit, and the opinions of their customer base. In order to keep from being thrown for a loop, the report recommends that marketers bear political and social views in mind when researching and targeting audiences.
“Marketers should ask how they can expand their use of demographics to segment audiences and target activity. For some organisations, in retail for example, there may be the opportunity to collect wider information about attitudes to the economy and household spending and use these to better understand customer types.
“Organisations should also be looking to understand attitudes and behaviours of EU and non-EU customers. … [T]he impacts [of Brexit] can be unexpected and firms should take a structured approach to understanding key sentiment and metrics, such as foreign demand for investment and its impact on business tourism.”
2) Be outward-looking
After Britain formally leaves the European Union, it will be imperative for companies to maintain an international perspective: to look outward, and focus on opportunities abroad and in emerging markets.
Although Brexit might make doing business abroad more challenging for UK businesses, the report author writes, “any company thinking about focusing on domestic markets exclusively, or being put off by potential barriers to trade with the EU27 may find themselves quickly left behind by others in their marketplace.”
Stephen Woodford, Chief Executive of the Advertising Association, said that Brexit should be an impetus for advertisers and agencies to ramp up their international interests.
“We have to think strategically about how we reach places we perhaps haven’t thought about reaching before. We have to think more about exporting. How are we going to ensure we’re going to carry on selling abroad, rather than just hoping we’re going to maintain what we’ve got? Use Brexit as a wakeup call to think about how we can do better.
“Taking all these things and re-examining, if you’re a firm in our industry that exports currently, think about what’s driven that and how can we do even more. Because it’s not going to get any easier. […] We’ve got to work harder at those things and we’ve got to show as an industry that despite the vote we’re still open, we’re still welcoming, we still want the best in European talent to come and work here.”
3) Understand hidden currency costs in marketing overheads
The value of the pound memorably tumbled to a 31-year low immediately after the Brexit vote, and although it has since staged a cautious recovery, businesses are now more aware of the need to watch out for currency fluctuations – particularly as details of Britain’s exit deal are still being hammered out.
Navigating Brexit advises that “currency volatility could mean further impacts to operational overheads in foreign currencies that become stronger against the pound.
“At a business level, there should be a readily available view of these impacts – but the marketing function may not have developed the same visibility, and there are plenty of hidden costs charged in foreign currencies which could tangibly affect budgets.”
For example, digital services such as MailChimp and Amazon Web Services that bill in US dollars are areas of marketing expenditure which could be affected by a fall in the value of the pound. For UK companies with significant email marketing spend, a drop of even 3 or 4% could rob spending power from elsewhere in marketing budgets.
To prevent this from happening, business leaders and marketers should be aware of the possibility of uncertainty, and ensure that flexibility is built into their marketing budgets.
4) Keep investing in marketing
In spite of political and economic uncertainty, marketing spend has continued to grow: the IPA’s Bellwether report, for example, has shown five years of consistent quarter-on-quarter growth in marketing budgets.
However, this growth slowed immediately following the EU referendum, and continues to fluctuate, with just a 0.8% increase in advertising spend predicted throughout 2018.
A Marketers Guide to Brexit argues that the response to tough economic conditions should not necessarily be to cut marketing budgets. “If the reaction to Brexit is to invest in growth, then budgets should support that and part of marketing’s role is to be vocal in pitching for that resource.” Marketing managers who take a more cautious approach when submitting their next budget may find it harder to compete.
“What Brexit may contribute to is a re-balancing of advertising and channel spend, with an even greater focus on cost-effective and impactful campaigns,” the report continues. “This means digital continues to rise.”
5) Be accountable and transparent
Amidst this general slowdown of marketing budget growth, CMOs are under mounting pressure to show accountability for spending and clear ROI, as viewability metrics make it easier for marketers to demonstrate their workings.
This pressure comes alongside general industry concerns around transparency in advertising, particularly programmatic advertising, which may be holding back advertising spend. A study of senior marketing executives conducted by Truth agency and London Research in late 2017 found that close to 80% had worries about programmatic advertising.
Expert contributors to Econsultancy’s report stressed the need to rebuild trust and maintain transparency and accountability as an industry.
“My advice to marketers … would be to ensure they are using the most sophisticated modelling techniques to make all media accountable, and ensure the effects of traditional media on digital aren’t being missed by more simplistic algorithms,” said Carl Erik Kjaersgaard, CEO of Blackwood Seven.
Molly Aldridge, CEO of M&C Saatchi PR, believes that not only should marketers be transparent with what they deliver, but that the industry can play a major role in clarifying Brexit for businesses and consumers.
“I’m a bit biased because I have been in marketing all my life, but I think marketing can play a really pivotal role in regaining and rebuilding trust,” said Aldridge. “If you are transparent with the marketing that you deliver, and you are honest and clear, I think that can really revolutionise the narrative around Brexit.
“I’m not sure anyone could actually say exactly what’s going on with Brexit, how it’s going to work. There aren’t that many people in the UK let alone Europe that are going to read a document of 50 pages.
“So it’s thinking about bite-size bits of information that start to really clarify what Brexit will mean to businesses, to consumers, to people in the UK, for people who are not from the UK originally but who now live here. Bite-size pieces of information that people can understand. Marketing plays a huge part in that. Rebuilding trust is, if you get marketing right, one of the most important parts.”
For reams more statistics, tips and expert advice on how to manage the opportunities and potential pitfalls of Brexit, download Navigating Brexit: A Provisional Guide for Marketers and HR.