“VUCA” won’t mean anything to a lot of Brits, but in recent times has become a term that most accurately describes the world in which we live.
It gained currency during the Iraqi insurgency – and is now a fitting assessment of the situation facing the UK, as uncertainty around Brexit makes it difficult for marketers to plan for their future.
According to an Enders Analysis report published this month, a ‘no deal’ Brexit could trigger the UK’s first advertising recession in a decade. At the same time, the latest IPA Bellwether report for Q4 2018 saw six years of continuous marketing budget growth end, as some advertisers adopted a ‘wait and see’ approach.
But in the face of a softening market, it’s important for marketers not to lose their nerve, and instead be careful to weigh the short-term benefits of cheaper ad space against the longer-term challenges.
Recessionary studies going back as far as the 1920s consistently show that brands which maintain, rather than cut budgets, enjoy increased saliency that builds out market share over the long term. That’s because it takes a long time to recover sales levels after a break in communications, and the effects on profitability in the mid-term are potentially more serious than those on cash-flow in the short term.
In such uncertain times, then, brands would do well to monitor the situation closely and take a dynamic approach to decision-making as it becomes clearer how the market – and audiences – are reacting.
There are a number of ways we expect the fall-out from Brexit to affect consumer behaviour in particular:
Post-Brexit we can expect some discretionary consumer spending to drop, at least in the short-term, as people wait to see just how much they are affected personally before jumping into any large purchases.
Breaking the News
When it comes to media consumption, there is potentially more positive news to come. In 2016, newspapers enjoyed a sales bump as people sought to better understand the implications of the referendum result as it unfolded. We expect Brexit to drive a similar increase this year as Brits look to be better informed of breaking news stories.
Money Saving Media
TV viewing figures saw a boost during the 2008/09 recession, with people choosing to save money by entertaining themselves at home. With audiences at least maintained in what could be a deflationary market, this means brands can expect more bang for their buck.
In uncertain times, people tend to seek out familiar voices and content that offers a sense of escapism – so trusted advertisers that offer reliable information or unforgettable entertainment should do well as we head into another unpredictable year.