CANNES, FRANCE -- London has been the ad capital of Europe for the past 50 years, with agencies like BBH, Creature of London and Adam&Eve establishing their headquarters in the city thanks to the its collective talent base and English-dominant language.
However, Thursday’s vote by UK voters to leave the European Union has important implications for the advertising industry. It was the hot-button issue for attendees at Cannes Friday.
"No one will want to be seen working with London agencies for the sense of it," says Scott Goodson, Founder/CEO, StrawberryFrog. "It will feel wrong to have a London agency. They insulted the Europeans. It will be politically incorrect to have a London agency."
There are several likely outcomes from this referendum, say advertising executives.
First, they expect there will be many more opportunities for agencies in other European cities. It is likely the costs related to advertising made in the UK or by agencies in the UK will be extremely high relative to the EU. This means there is probably going to be a massive shift of London-based agencies to Berlin, Amsterdam, Stockholm, or Paris and possibly other EU locales, executives said.
Big multinational companies seeking global accounts will relocate or decide against setting up headquarters in London.
Also, the unraveling of trading agreements will result in higher costs for clients and London-based agencies. They will now have to negotiate separate deals for UK advertising. Global deals will no longer benefit from lower taxes and the other perks that they received for being part of the EU.
"Economic uncertainty is always bad for business," says Zita Kisgergely from Hungarian production company PPM Films. "Advertising is one of the budgets to be tightened when times get tough. If the economists are right, we could see some tough times. An immediate weakening of the pound will mean the biggest advertising production buyer will have less money to spend."
And there may also be a massive talent drain.
"The implications of Brexit are a slowdown for the appetite to invest in innovations and start-ups [and will] scare talent away in London," says Adam Kerj, CCO McCann Scandinavia.
Adds Goodson: "If I were an ad professional today, I would start thinking about moving to Berlin and/or Paris. London will become a less significant marketing center.”