NEWS31 January 2013

Advertising delivers £100bn to UK economy, claims report

Financials UK

UK — Advertising delivers £100bn a year to the UK economy by increasing the level of economic activity and increasing productivity, according to a new study by the Advertising Association (AA) and Deloitte.

The analysis, published today in a report called “Advertising Pays”, suggests that advertising is a “vital enabler” of the UK’s consumer economy that plays “a critical role in the high-growth digital and creative sectors”.

Based on an econometric analysis of advertising’s effects on market efficiency, productivity, competition and innovation, Deloitte found that, on average, £1 of advertising spend returns £6 to UK GDP. Based on industry figures showing £16bn was spent on UK advertising in 2011, the business consultants estimate that these returns means that the industry generated £100bn to the UK economy and helped to export over £2bn in advertising services each year. It also created over 550,000 jobs.

The report states: “Advertising has a critical role in making the economy function. It is at the centre of a virtuous circle of competition, innovation and market expansion, to the benefit of consumers and businesses…Increases in advertising spend boosts competition, improving quality and pricing for consumers. Advertising can play a key role in accelerating the growth of new business and ideas.”

AA says that limitations on the availability of data meant it could not analyse the effects of market research to the advertising industry in the report. A similar study by the Market Research Society and PricewaterhouseCoopers published last year found the professional research and evidence market delivers up to £3bn a year to the UK economy and might employ as many as 60,000 people, accounting for around 0.2% of UK GDP, making it comparable in size to the UK newspaper publishing and UK core film industries.

Tim Lefroy, CEO of the AA, said: “In an economy where 60% of GDP is rooted in household consumption, the means to bring products to market must not be forgotten. Advertising is sharpening competitiveness and acting as a spur to innovation. This report should prompt fresh thinking both by industry and in Government in support of our role.”

Secretary of state for culture, media and sport, Maria Miller MP, added: “Advertising has a huge impact on our economy and on our reputation abroad, helping to inspire growth, investment and tourism. We must nurture this talent, which is admired the world over, so as the advertising industry can realise its full potential as a key driver of economic growth.”