The people have spoken and Britain is set to leave the EU. Now it appears our elected politicians are struggling to come up with an exit plan or to explain what this means for the British public and its economy however all this means that it’s even more important for businesses to prepare their own companies for upcoming changes.
This is the case for digital marketers just as much as any other industry, so what can we expect to change moving forward and how will this impact upon digital marketing companies?
First of all it looks like the pound is going to be significantly weaker against the Dollar and also other currencies. There are a wide variety of predictions however a 15% decline is looking likely going by the current market reaction and predictions from city experts.
This is going to have a direct impact on many costs for Digital Marketing agencies who buy in third party technology to enhance their packages. For instance a custom package with the CRO platform VWO which costs $999 will now set back a UK Digital Agency £100 more per month than the pre Brexit era.
Have you any clients signed up to a chat facility through yourselves? Well a Standard package from DeskMoz will be costing you around £40 per month more than it was pre-referendum. Digital marketing agencies will have to factor these into their packages to maintain profit margins which could result in higher costs to their clients.
The flipside to the higher costs for UK Digital Agencies is that it could be easier for Digital Marketing Agencies based around the world, particularly in the USA, to compete against UK based agencies.
Just as it’s more expensive for UK based firms to buy goods in Dollars it’s cheaper for foreign firms to buy goods and services from the UK as their currencies are worth more. This will include competition on UK targeted PPC keywords which could have the effect of increasing the CPC in some of the most competitive areas.
The impact of the fall of the pound is going to have a mixed effect on your client base. Theoretically some industries will benefit with manufacturing being at the forefront. A lower currency level means that your exports suddenly become cheaper which is likely to benefit companies who manufacture products in the UK and sell abroad. Of course many of these manufacturers are likely to import raw materials and parts which become more expensive which will act as a counter balance to greater or lesser degrees.
UK based technology companies maybe best placed to take advantage of a lower pound as in general they will need to import less than the average manufacturing company so the downside of a weaker pound will affect them less.
On the other hand many retailers who import goods into the UK may well start raising prices soon as goods manufactured abroad and imported are suddenly more expensive. UK retailers who have a significant customer base abroad are going to have to incorporate the extra costs into their models or pass on the cost to their customers.
The next major piece of legislation from the EU to impact digital will be the EU general data protection regulation (GDPR). This is a new data protection law framework due for launch in 2018.
Now you may have thought that this will no longer apply in the UK however if an organisation is processing personal data about a person who is in the EU then the rules will apply regardless of where the organisation is located.
The net result is that to continue to attract customers from the EU post 2018 businesses should proceed with compliance with this new regulatory framework. In fact it is likely that the UK will launch its own equivalent legislation that is likely to be heavily based on the new EU regulation.
This is the area that needs requires a little bit more guesswork than the previous points. However Bloomberg intelligence is forecasting a 2% fall in advertising revenue in the medium term as consumer spending slows and this seems like a sensible forecast, somewhere in the middle of “nothing much will change” and “the economy is about to collapse” predictions.
Now how will this impact digital marketing?
Well this is the good news, during the last major economic crisis of 2008 digital actually benefited. It’s true there was a big cut in traditional advertising however some of that was shifted to company’s digital advertising budgets as companies focused more on advertising that could provide a trackable Return-on-Investment (ROI) which has always been a strong point of online marketing.
In 2008 in the midst of the recession Digital Advertising grew by an estimated 5.7%. So in amongst some doom and gloom there are chinks of light for the UK digital marketing industry.
Well beside your regular day to day work be aware that some of your clients are going to be negatively affected by Brexit, some others may actually benefit from Brexit and be as proactive and as helpful to your clients as possible.