A Brexit vote could cost the UK £70m in adspend growth each year, according to a new report by Zenith.
The economic uncertainty over a Brexit vote has led many within the ad industry to question how the consequences would impact advertising world.
Zenith’s new analysis is based on the UK Treasury and many other financial institutions’ predictions that as a non-EU member the UK would see huge reductions in the flow of trade and investment which are closely tied to the health of the ad industry.
The Advertising Expenditure Forecasts report argues that a lack of growth would have a significant impact for the ad industry because growth leads to more products from existing advertisers and more new products from start-ups, all of which need to be marketed to consumers.
Using the wealth of financial predictions published in the lead up to EU Referendum on 23 June the ad agency has estimated that, at today prices, Brexit would cost the UK ad industry £1bn in advertising growth over 15 years.
Over the past 35 years, the UK ad market has averaged 1.1 per cent growth for every 1 per cent increase in GDP, says the report.
“While the immediate effect would be muted, Brexit would have a long-term cost for the UK ad industry, holding back its growth by £70 million a year,” said Jonathan Barnard, Zenith’s head of forecasting. “It would also threaten to make cross-border accounts in Europe more costly and cumbersome to operate.”
The consequence of an exit and fears over how it could impact the economy would likely deter many advertisers from investing in the UK. Global advertising agency Ogilvy & Mather has explicitly stated that it would not invest further in the UK if the Leave campaign wins the EU referendum.