New-business reviews fell in 2016 amid uncertainty

New-business reviews fell in 2016 amid uncertainty

New business declined in 2016 due to a lack of confidence among brands in the wake of the Brexit referendum, AAR's New Business Pulse shows.

Overall, completed new-business reviews were down 2% on 2015, with advertising reviews falling 3% and media 4%. CRM and direct reviews were flat in 2016, while digital and integrated reviews each grew 2%.

It was a busy final quarter as over the first nine months of 2016, new business declined 14% year on year.

Total reviews in 2015 grew 5% compared with 2014 (6% for advertising and 11% for media). 

Kerry Glazer, chief executive of AAR, said the European Union referendum’s unexpected result caused a number of businesses to put the brakes on planned reviews while they waited for the implications to become clearer. However, reviews picked up again by the autumn as it became apparent that there were no serious short-term economic effects.

James Murphy, co-founder of Adam & Eve/DDB, warned that the upcoming process to exit the EU still holds risks for UK agencies, especially when it comes to international brands seeking a European agency.

He said: "We’re not strangled by the level of legislation that the French agency sector deals with and don’t face the same shortage of talent as the German industry." 

That said, the question is whether these advantages would outweigh any new barriers to doing business in the UK caused by Brexit, Murphy noted.

2017 will be a "busy" year for new business in media, Josh Krichefski, UK chief executive of MediaCom, said – though he conceded that the referendum has led to and will continue to create uncertainty.

Eleven brands with UK media budgets above £20m reviewed their ad accounts last year, just one fewer than in 2015. This was thanks to a wave of activity in the supermarket sector, with Aldi, Asda, Co-op, Marks & Spencer, Morrisons and Sainsbury’s all making appointments after Waitrose and Tesco completed reviews the previous year.

Claire Harrison-Church, Asda’s former vice-president for customer proposition and planning, said: "When you’re in a deflationary market with negative sales growth and fighting to hold on to share, you’re going to be looking under every stone."

Retail was the sector accounting for the most reviews, followed by food, finance, travel and charities.

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