Yesterday, as Americans slept, our European forbears made their voices heard in one of the most important votes they’ll ever make as citizens of the United Kingdom. What many around the world considered unthinkable has come to pass: the United Kingdom has voted to leave the European Union.
We will not provide an opinion on the decision made, but it raises some interesting questions:
What Effect Will #Brexit Have On My Business?
The first and obvious question is seeing immediate answers. Brexit already has markets in turmoil, both in the United States and abroad.
— Wall Street Journal (@WSJ) June 24, 2016
The British pound, which fell more than 8 percent on Thursday night — the worst one-day performance in the history of the currency, according to Bloomberg — is, as of press time, valued at only $1.37. The magnitude of the fall is summed up rather nicely in the chart below:
History: GBP 1D Percent Changes Since 1970 pic.twitter.com/TNOMBq3wZw
— Michael McDonough (@M_McDonough) June 24, 2016
As the potential of a #Brexit recession looms large around the world, the European Central Bank, the Bank of England, the US Federal Reserve, and the IMF have made it known they are ready to pump money into financial markets to calm volatility.
In the long term, no one knows how the pro-Brexit vote will affect them, but a Financial Times reader, known to us only as Nicholas, offered these sobering words:
Very smart and depressing take on the Brexit vote. pic.twitter.com/Zvs4WrmhEe
— Steven Greenhouse (@greenhousenyt) June 24, 2016
It’s likely that some American firms that have relocated to the UK in recent years may consider relocating again. The UK had been a comfortable beachhead for US firms making inroads into the greater European marketplace — with a familiar language, similar culture and values, and strong, stable economy — but with the results of the Brexit vote, many of the benefits have disappeared. Borders that were once open are now closed, reducing both the professional and personal mobility of the best workers (click to Tweet!), and “stable” may not be a word we use to describe UK markets for some time. According to the BBC, UK interest rates are likely to hit zero in the coming months as the Bank of England tries to stanch the flow of blood.
If yours was one of the many businesses that located in Edinburgh in recent years, whether you relocate or not, you may be operating in a new sovereign state soon. The Scottish First Minister, Nicola Sturgeon, speaking about the results, called it “democratically unacceptable” that Scotland would be dragged from the EU against its will. Scotland voted against Brexit, with a comfortable 24 percent margin.
“It is . . . a statement of the obvious that a second [independence] referendum must be on the table,” Sturgeon says. The silver lining to the coming political and economic turmoil? If you were pro-EU and located in Scotland, you might return to the EU sooner rather than later.
If your organization is located in the United States but does significant business in the United Kingdom, you will most certainly be affected as well. The fall of the pound could mean your cost of doing business will fall in parallel, but market volatility will likely reduce some firms’ willingness to invest in your products or services, as few know what the post-Brexit future will hold. But hey, at least you’ll be able to travel to the UK for less now, right?
How #Brexit Predictions Got it Wrong (or Right)?
Last minute polls predicted voters would choose to remain in the European Union by at least an eight percent margin. The Wall Street Journal reported that pollsters and prediction markets (read: gamblers) both considered a “Stay” outcome to be likely, bucking the trend of pollsters being wrong alone. Even prediction algorithms aren’t perfect, despite their ability to correct for short-term bias, unlike polls.
Social media sentiment, however, leaned slightly in favor of #Brexit, as reported Thursday by social media analytics firm Spredfast. This is especially surprising, as conventional wisdom tells us that the youth power social media, and the youngest demographic eligible to vote (18-24) voted overwhelmingly to stay in the EU.
— (((Stephen Miles))) (@SPMiles42) June 24, 2016
Brexit’s Impact on Digital Marketing
The European Union has long been a source of frustration for digital marketers. Their onerous privacy requirements, such as “right to be forgotten,” aren’t going anywhere anytime soon, but the UK (which does still have privacy regulations of its own) will no longer be subject to most of them. Whether or not Google and other Internet giants will change the changes they’ve already made to accommodate recent developments remains to be seen, but it is likely digital advertising in the UK will change somewhat, and hopefully for the better, as far as marketers are concerned.
— Troy Hunt (@troyhunt) June 24, 2016
Finally, the juxtaposition of the youth vote and social media sentiment shouldn’t be lost on anyone. The older (50+) demographic drove the results of this Brexit vote, and Spredfast’s accurate assessment of the social media sentiment — a metric long disbelieved and ignored by executives and management — means that social networks are utilized by many of the decision makers B2B marketers target. They visit and trust social media to discuss matters of the utmost importance and that have far-reaching economic impact. Does anyone still doubt the power of social selling and social media marketing?