Close-Up: How will new Govt affect ad industry?

COI's ad budget will be slashed and regulation is a prospect, but it's not all bad news.

Britain's ad industry doesn't know if it will end up blessing or cursing the hastily arranged political marriage of David Cameron and Nick Clegg.

On the plus side is the fact that both newlyweds have experience of commercial communication, the Prime Minister as a director of corporate affairs at Carlton, his deputy as a political lobbyist at GPlus, where British Gas and Hertz were among his clients.

But in the end, that may not count for much when set against the huge deficit that the coalition Government has made it a priority to tackle - and the consequent impact on public and consumer spending.

Not only will agencies in general have to face the knock-on effect of consumers clobbered by tax rises, but those on the COI roster will have to brace themselves for a 50 per cent-plus reduction to the £400 million annual ad budget.

"Anybody who thinks this government's arrival is suddenly going to liberate the ad industry will be seriously disappointed," a senior executive of an industry trade body tells Campaign.

The depressing prognosis has been sparked by the likely influence of the Liberal Democrats - never firm friends of the industry - at the heart of the administration.

Some see the fuss kicked up last year by the party over airbrushed, "unrealistic" images of women in ads as symptomatic of an underlying hostility towards the industry. The result could be even heavier curbs on the promotion of alcohol and snack food.

Whether or not this kind of animosity could evolve into a serious threat to self-regulation is an open question.

"Self-regulation works well for us but hasn't in other sectors such as banking," Julian Ingram, the managing director of the marketing company Momentum UK and a Liberal Democrat advisor, explains. "So self-regulation isn't exactly flavour of the month with this government."

The big fear is that the "light-touch" regulation of the industry that Jeremy Hunt, the new Culture Secretary, wants to maintain, will come under threat if cracks start appearing in the coalition.

Farah Ramzan Golant, the Abbott Mead Vickers BBDO chief executive, is willing to bet it won't survive beyond September, while one observer says: "If fault lines begin to show, the temptation will be to go for some headline-grabbing crackdowns on advertising that would have the potential to do a lot of damage to the industry."

However, not everybody believes it will be all unalloyed gloom. Tim Lefroy, the Advertising Association chief executive, says: "We think the timing of the new government's arrival is perfect. We'll be urging it to reappraise the industry and to understand its value to society."

Ian Twinn, ISBA's director of public affairs and a former Tory MP, suggests lack of money for public-service advertising may force the Government to forge a serious partnership with business in order to fill the gap.

"There's a genuine willingness within the business sector to become involved - just as long as it doesn't keep getting hectored and lectured about its products," Twinn explains.

Meanwhile, the industry is privately relishing the prospect of pressure groups with anti-advertising agendas no longer getting public cash to prop them up. As one gleeful industry lobbyist puts it: "If this government wants to save money, I can't think of a better place to start."

AGENCY HEAD - Guy Hayward, UK group chief executive, JWT

"As the Government looks towards the creative industries to stimulate an economy less dependent on the financial sector, I think we as an industry could benefit.

"I'm also sceptical that COI spending will be cut as savagely as predicted. This is a government that's going to have lots to communicate and I don't believe it will be able to deliver on cuts to the COI budget.

"Tighter advertising regulation is an easy crowd-pleaser, but it won't help stimulate the business growth that's needed. As a result, I don't believe the threats to self-regulation will get more serious."

LEGAL SPECIALIST - Philip Circus, legal affairs director, Institute of Sales Promotion; former legal affairs director, IPA

"If people think the coalition will lead to a rolling back of state intervention as far as advertising is concerned, they'll be disappointed.

"The presence of the Liberal Democrats will ensure the pressure on things like alcohol advertising won't diminish and may get more intense. Not least because Vince Cable, the new Business Secretary, is a firm believer in intervention.

"This isn't going to be a government that's likely to be friendly towards advertising. Many Liberal Democrat backbenchers are hostile and will need to be kept happy."

INDUSTRY BODY HEAD - Ian Twinn, director of public affairs, ISBA

"If the COI budget is to be reduced, public-service advertising that relies on repetition and longevity for its success would have to be pulled.

"The answer is for the Government to work with business. The industry has already shown through initiatives such as Business4Life and campaigns to promote sensible drinking that it can work in serious partnership with government.

"The last government made some real progress with this but it also put up a lot of barriers. If the new government was to take a more mature view, it would find great willingness by businesses to have their campaigns reinforce official ones."

AGENCY HEAD - Chris Pinnington, UK group chairman, Euro RSCG

"I think this must be the first time that we've had a Prime Minister who has worked in commercial communication, as well as a deputy with experience of the sector.

"That's got to be good news, particularly at a time when the Conservatives are eager that the UK should become Europe's creative hub.

"Having worked with the Conservatives during the election campaign, it's clear to me that they realise the power of advertising. You only have to look at how well they used the digital medium to see how true that is."

- Got a view? E-mail us at