Commentary

More Uncertainty LIkely -- But Is There Upside To U.K.'s Exit From The E.U.?

Get ready—this may hurt a lot. The U.K., the biggest ad market, has voted to leave the European Union. The shockwaves were palpable on Friday. The financial markets reacted negatively; we’ll have to see how  or whether they recover this week.

The initial reactions from media and advertising executives—who were just getting off the giddy high that is the Cannes Festival of advertising—was uncertainty. No one knows exactly how this will affect their business in the near term or long term.

“Very disappointed, but the electorate has spoken,“ Martin Sorrell, chief executive of London-based WPP, said in a statement. Sorrell was  a proponent of remaining in the EU. “The resulting uncertainty, which will be considerable, will obviously slow decision-making and deter activity. This is not good news, to say the least.”

The only thing that’s certain for providers of advertising, marketing, and media services providers is more uncertainty.  Stock prices for European advertising companies mirrored the activity of the wider market Friday. U.K.-based WPP’s share price fell 4.1% Friday, while France-based Publicis Groupe and Havas declined about 5% and 2.8%, respectively.

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How will advertising, marketing, and media services providers navigate this uncertain time? Not to mention media companies. For example, Time Inc.’s U.K. unit generated 12% of the overall company’s $3.1 billion in revenue last year. Time Inc.’s shares were down recently 4.3% in the U.S. Most U.S.-based companies have major operations in the U.K. They are often the headquarters for the EMEA region.

But could there be an upside here? There are some interesting nuances to the U.K.’s decision. For example, the E.U. has rather stringent data protection laws: the General Data Protection Regulation. By leaving the E.U., it’s possible that the U.K. will have looser data restrictions than the E.U. This may be a positive for marketing and ad-tech businesses and may make the U.K. a more enticing place to do business. And the U.K.’s decision, oddly enough, may have an impact on transparency issues in the industry. Being independent of the E.U. may mean that more U.K. marketing businesses will go their own way and make up their own rules and best practices.

1 comment about "More Uncertainty LIkely -- But Is There Upside To U.K.'s Exit From The E.U.?".
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  1. Mike O'Neill from Baycoud Systems, June 27, 2016 at 2:58 p.m.

    Any UK Government will want to retain access to to the single EU market, which will require agreeing to EU consumer regulations e.g. the Data Protection Directive, the rPrivacy Directive and the pcoming GDPR.
    Even in the unlikely event the UK goes it alone any component of trade needing access to personal data will require proof that data protection is "essentially equivalent" and, especially as the UK has already agreed to the GDPR (in the European Council), will inevitably implement it in UK law.

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