M&C Saatchi Bullish on Brexit Trigger; Sees Robust U.K. EconomyBy
Ad agency says competitors may be overplaying the negatives
CEO Kershaw: ‘I don’t see why one should get into a dark mood’
M&C Saatchi Plc, the global ad agency, said its competitors may be overplaying the negative impacts of Brexit as it reported growing revenue in the U.K.
“Clients aren’t saying ‘Oh my God, Article 50 is going to be triggered, we must slash our spend,”’ M&C Saatchi Chief Executive Officer David Kershaw said by phone. “I don’t see why one should get into a dark mood about it.”
The U.K. economy has performed better than many expected since the June vote to leave the European Union and the Bank of England revised up growth forecasts in February. Strong employment figures, low fears of unemployment and sustained low interest rates are all boosting U.K. sales and demand for advertising, Kershaw said.
M&C Saatchi’s like-for-like U.K. sales grew 5 percent in 2016 to 88.5 million pounds ($108 million), the London-based company said in a statement Thursday, helped by account wins from EON SE, Virgin Group Ltd. and government departments such as the Home Office.
U.K. sales made up 39 percent of the company’s total revenue. Overall, sales grew 26 percent to 225.4 million pounds, aided by currency fluctuations. The drop in the British pound since the June 2016 Brexit vote has boosted reported sales for U.K.-based companies like M&C Saatchi that do significant business outside the country.
M&C Saatchi’s bullish view contrasts with that of advertising giant WPP, which said business in the U.K. cooled in the last quarter of 2016. WPP Plc CEO Martin Sorrell has said he’d like to see a soft, fast Brexit to reduce business uncertainty.
British premier Theresa May is expected to invoke Article 50 of the Lisbon Treaty, the formal mechanism to quit the EU, by the end of this month.
M&C Saatchi has only seen one significant case of a client abandoning a project given concerns over Brexit, Kershaw said.
“Consumers are still spending and marketers are under huge pressure to win market share,” Kershaw said.