Over a year ago, following a very close referendum, the British Government made the decision to leave the EU. Seeing the current negotiations taking place only serves to highlight the many uncertainties that still surround the Brexit process. With a year of political twists and turns, including a snap election and surprise hung parliament, the final outcome of negotiations doesn’t seem to be any clearer.
With a lot of potential changes on the horizon, we have however been able to pinpoint some of the main questions that digital marketers might have about the industry. Here, we outline five factors and how they might affect us in a post-Brexit world.
1. The strength of the pound in question
As the results of the referendum came through, we saw the value of the pound plummet. The rapid decline of currency strength could have disastrous effects on the whole digital landscape, and when boiled down, leaves two likely scenarios.
This is based on the confidence of investors, which will allow the pound to continue to steadily grow. For digital marketers, this means that international competition is likely to be fairly stable within the UK, but means that it will be tougher to export digital services.
The second possible outcome is based on the opposite scenario. In June 2016, the pound saw a significant drop in value, bringing it closer to the US dollar and the Euro. The principal consequence of this is an increased demand for British goods, benefitting internationally focused digital campaigns. Brands such as Virgin Atlantic have even launched tools such as the “Brexit Calculator”, which simulates how much American holidaymakers might save on a trip across the pond as a result of the declining value of the pound.
The main downside would be intensified internal competition in the UK market, which would ultimately become more accessible. Followed closely by another negative side-effect. With the pound’s depreciation, digital marketers might find that all costs for services that are paid for in dollars will inflate, and such services are wide-ranging – think Amazon Web Services, MailChimp, Act-on, and so on.
If the result of the vote alone led to the pound’s lowest level since 1985; when Brexit officially happens, the effects could be devastating.
2. Data and privacy regulations
The entire Brexit process is an arduous and time-consuming one, which means it isn’t likely to be completed within the next two years. This means that the UK will still be part of the EU in May 2018, when the new General Data Protection Regulation (GDPR) comes into act.
Now, you might be wondering: ‘What is this law and how might it affect me?’
The law centres around ‘Privacy by Design’, which means that Data and Privacy will have to be at the centre of companies’ data policies, as it changes the way data can be collected and stored.
Amongst the numerous changes, the biggest one for digital marketers undoubtedly centres around acquiring consent for personal data collection and the notification of when this personal data is used. Furthermore, any data collection for children under 16 will need to be approved for by parents. Currently, users are required to ‘opt-out’ rather than ‘opt in’ to data collection.
These new regulations will carry with them a pretty hefty fine for non-compliance, and will completely change the present model. As a result, digital marketers might end up with more limited targeting options and encounter problems when setting up remarketing lists for search ad (RLSA) campaigns, which often provide the best returns for marketers.
What happens after Brexit?
These new laws apply to all EU citizens, so if you are working internationally you will need to comply with this law.
In addition, the Information Commissioner’s Office has confirmed that the GDPR will apply in the UK from 25 May 2018, and that the UK’s decision to leave the EU will not affect the commencement of the GDPR. Therefore, “although there may still be questions about how the GDPR would apply in the UK on leaving the EU, [… ] this should not distract from the important task of compliance with the GDPR.”
3. Digital single market
Although the ‘digital single market’ has received less news coverage than other Brexit topics, it’s one that will directly impact the digital marketing landscape. The digital single market is an online trading market which enables EU member states to trade services, goods and capital online, without any restriction, by removing cross-border barriers and standardising data privacy.
This online trading place has been valued at €500bn by the European Commission and is worth an extra €415bn to the European economy. Furthermore, a study from the same commission shows that 57% of EU businesses could increase their sales under the digital single market, growing the European export economy.
Considering that the UK is the strongest digital player in the EU, to be forced to leave the European digital single market as a result of Brexit could significantly hamper growth. It could push investors and entrepreneurs out of our borders and in the worst-case scenario, render UK-based businesses unable to operate in the EU without moving their headquarters to an EU member state.
4. Digital skills shortage
The UK is considered to be a digital leader within Europe, with the industry accounting for almost 10% of its gross domestic product, highlighting the importance of having access to the best and brightest digital talent and skill set . With the UK already facing a digital skills shortage, and Brexit likely “to exacerbate this further”, it’s now more vital than ever to create an attractive marketplace and to have a simple process in place to easily recruit international talent.
Whilst the UK’s job market is strong and likely to remain an attractive option for international jobseekers, with Brexit there might be a (short-term) decline in its appeal. It’s likely that a working visa will be put in place, which would mean more administrative work for both businesses and potential recruits, which might discourage talent from considering the UK.
Coupled with the digital single market and the fact that many EU member states are already investing heavily in their digital sectors, the consequences of Brexit could end up creating a degree of uncertainty around the potential for digital growth in the UK.
The effects on the digital job market will depend largely on whether we ultimately see a ‘hard’ or ‘soft’ Brexit, with the latter hopefully meaning a simplified visa process and immigration policy that keeps new talent coming.
5. AI investment
Artificial Intelligence (AI) is another area of development which, whilst perhaps not explicitly discussed in a Brexit agreement, could end up being affected by wider changes.
In order to remain a digital leader in Europe and fuel growth in the UK, the British Government plans to heavily invest in new technology, with a forecasted spend of £654bn by 2035.
The growth of AI and machine-learning presents a wonderful opportunity for development and increased efficiency for digital marketers in numerous areas including segmentation, semantic analysis, website design optimisation, chatbots and smart bidding.
As outlined in this previous post illustrating what the future of SERPs might look like, AI is completely changing the digital landscape and opening up a brave new world of development and possibilities.
The investment in AI planned by the UK government has the potential to be a major game changer, and might be the saving grace for the digital industry, and could help the country recover after Brexit.
A note about budgets
As you might expect, when there is uncertainty, companies tend to be more conservative with their budgets and will often cut spend. However, we saw that during the 2008 economic crisis, digital advertising budgets actually grew on average by 5.7%.
How is digital profiting during these uncertain times?
The answer may lie in the fact that companies tend to shift traditional advertising budgets to digital advertising, which can provide trackable KPIs, particularly for return on investment. Businesses prefer to be able to precisely see what is going on, especially during unpredictable periods, ensuring they can monitor, manage, and deliver results at any given time. Accountability and clear returns have always been digital marketing’s strong points.
In this post, I wanted to provide an overview of some of the factors that digital marketers deal with regularly, which might be influenced by the Brexit process. These will most likely change and whether it is a hard or soft Brexit, the digital landscape will undergo significant changes. Brexit could even turn out to have a positive impact on the digital economy after a period of uncertainty. Without being tied by EU regulations, businesses could even be in a better position to develop and innovate.
The bottom line is, there is no need to panic or make rash decisions; we just need to be patient and wait for the results from the negotiations. In the end, nothing will collapse and we will always be able to adapt to the changes. We need to embrace it, not be afraid of it.