The Long View When Britain leaves the European Union next year, every sector in the economy will feel the impact, including marketing. In response to this coming challenge, the Chartered Institute of Marketing commissioned PwC to deliver a new report on the readiness of the industry to adapt to the new operating environment. In particular, CIM asked whether marketers are prepared to take advantage of the opportunities presented by overseas markets, in terms of having the right knowledge and skills. PwC and CIM also revealed, for the first time, how much the sector contributes to the UK economy T he world is arguably more uncertain than ever and Brexit is a major contributor to this, particularly for British firms, says Julie McClean, principalresearch consultant at PwC and one of the authors of CIMs new report Export Ready, who spoke to Catalyst about why undertaking the study was so essential. CIM wanted to work with us to provide leadership and offer confidence to UK businesses, by gathering information on the contribution of marketing to the economy. Together, we sought to uncover the barriers to challenges and opportunities inherent in export markets and identify the level of confidence in the sector about post-Brexit trading. Methodology Before the team could establish marketings readiness for the new environment, it was important to survey the current state of the sector. Marketing has changed a great deal over the past decade or so, particularly in the areaof digital technology, says McClean. As The definition of such, there isnt any up-to-date informationabout how much value marketing, as reached marketing adds to the economy, or a widely accepted definition of the by CIM and PwC in the report discipline. Working with CIM, the team reached a definition of marketing that Export Ready divided the sector into marketing providers and in-house practitioners. To calculate marketings contribution to the economy, PwC analysed public datasets, conducted a new survey of UK businesses, interviewed leading marketers, and tapped into the CIMs knowledge and expertise. Two of the key sources of data were the 2017 Office for National Statistics Labour Force Survey and the Department for Business, Energy and Industrial Strategys (BEISs) Small Business Study. CIM also has excellent data on marketing salaries that we needed for our calculations, explains McClean. We pooled this information to come up with a really solid foundation for our estimates. From these sources, PwC was able to calculate a gross value added figure which, in laymans terms, is a measure of how much a particular sector is worth. It supplemented the data by carrying out a new survey of UK businesses that quizzed marketers about their attitude to exporting, and how they assessed their own readiness and skill levels. To support the results, PwC conducted a series of interviews with experienced marketers, to get a sense of why people were responding in the way they did. By reaching this definition of marketing, and finding these fundamental statistics, we would come up with a benchmark, says McClean. Then we look to measure change over time. Results marketings contribution to the economy The report revealed that the UK marketing industry employs up to 415,000 people and generates 36.5bn in annual gross value added (GVA). These are the first concrete estimates to be drawn up for the marketing sector. Overall, marketing represents approximately three per cent of the UK business economy, excluding financial services. Of these totals, in-house marketing functions contribute more than 285,000 full-time equivalents (FTEs) and a GVA of 25bn. Agencies account for around 130,000 FTEs and about 11.5bn in GVA. This figure includes marketing consultancies, advertising and branding agencies, PR firms and a range of other providers. GVA and FTE are standard measures used widely by PwC and other consultants to gauge sector strength. They are based on the number of full-time employees in a given business or sector, and the sum of their average salaries. Optimistic outlook In terms of confidence, marketers are optimistic about the future, says McClean. The level of confidence and positive thinking in the industry was very apparent, particularly among those firms that are already exporting. Of this group, 69 per cent expect international sales to increase in the next three years although, among businesses not already exporting, the figure was 41 per cent. In addition, 62 per cent of agencies expect their budgets to increase over the same period. According to McClean, this sense of positivity chimes with other PwC research projects, such as Global CEO, indicating a healthy level of confidence on the part of the worlds businesses. Skills to drive growth Although marketers appear to be rather bullish about their prospects, McClean sounded a note of caution. Marketers were positive, but digging deeper into the results highlights some of the challenges posed by Brexit. VIEWPOINT: Chris Daly, The main ones were revealed to be around skills chief executive, CIM gaps and in hiring people with the right experience and capabilities to drive export growth, which appears to be an issue for exporters and non-exporters alike. More than one-third (35 per cent) of in-house marketing teams have experienced difficulties in finding people with the right skills to drive their exporting strategy forward. Agencies are even less confident in their mix of skills, with more than two-thirds (67 per cent) agreeing that organisations face difficulties in finding people with the ability to drive export growth. One particular gap is in adapting a marketing strategy for different export markets an issue flagged by 40 per cent of marketers. You may have a strategy that already worksfor Germany or France, but its how you take that andapply it for China, or the UAE, saysMcClean. Thinking beyond Brexit Marketing has changed a great deal over the past decade or so, particularly in the area of digital technology Julie McClean, principal research consultant, pwc Interestingly, the results suggested this skills shortage was having much more of an impact than tariffs or political uncertainty. Brexit wasnt a top-of-mind issue. It was certainly important, but in terms of the barriers to increasing exports it was way, way down the list after skills shortages and confidence in approaching new markets. The scale of the skills-related barrier forms a sharp contrast to the confidence expressed by marketers about growing international sales. A lack of confidence in approaching new export markets is leading to uncertainty which, in some cases, is leading to inaction, says McClean. Strategies for export One of the other surprises from the research was how few marketers had an export strategy. Among those firms already exporting, only one-third (34 per cent) had an export strategy. This is highly likely to be because of a lack of skills in being able to create and adapt export strategies, says McClean. Those that did have a strategy predicted higher growth. For McClean, this was a crucial take-out for all marketers. Its hard to over-emphasise the importance of having a plan, and building the right capabilities and skills. Its not just marketing abilities that are important. Its appreciation for other cultures, experience overseas and, of course, language skills. We will be releasing a manifesto with recommendations for how we address these challenges and we hope you will support us. Such a result resonates with the wider international economic outlook, says McClean. Were seeing this perceived skills shortage in other sectors not just in the UK, but in Europe and on a global level. To view the full report, visit exchange.cim.co.uk/exportready cim.co.uk/exchange