Telling advertising's big story: how UK is selling ads to the world

Cannes Lions: UK shops are second only to US agencies for award wins
Cannes Lions: UK shops are second only to US agencies for award wins

Karen Fraser, the director of Credos, the think-tank, explains the Advertising Association's work to show how advertising is a big contributor to the UK economy.

Jeremy Bullmore describes advertising as "this entirely benign profession, without which we would all be the poorer". But when BT’s Gavin Patterson took over as president of the Advertising Association in 2011, he wanted to know "how much poorer?" 

The latest Advertising Pays report, looking at the export value and global impact of UK advertising, has just been published, and is the fourth chapter in a story that has sought to answer just that. 

Gavin thought it time that we write the economic case of advertising. Because if you can’t convincingly make the case for advertising, how do you mount a defence for advertising freedoms when policymakers turn their attention to our business?

For decades, the Advertising Association and Warc have measured advertising spend, but there was no evidence for the impact that spend has on GDP. And my job as director of advertising’s think tank Credos is to make sure debates on advertising’s role – in the economy, in society, in culture – are evidence-based.

So with the backing of the agencies, brands and media that support the AA, we got to work.

We approached Deloitte for help and, using 14 years of data from 17 countries, they calculated £16.1bn spent on advertising in 2011 produced a £100bn contribution to UK GDP.

How? Advertising fuels competition, by showing people they have a choice. Which kick-starts innovation, encouraging companies to bring new products and services to market. By building brands it helps protect those innovations, grow investment and exports. And so for every pound spent on advertising, GDP grows by £6, supporting over 550,000 jobs.

Policymakers took note immediately. Maria Miller, then Culture Secretary, was the first Cabinet Minister to attend advertising’s annual leadership summit. Advertising took up its rightful place around the Creative Industries Council table. The AA opened new doors to the Business Department and Treasury.

But Labour politicians weren’t so sure. Some thought of advertising as a tool of Big Business, something that keeps new challengers out. So we looked at how advertising works for SMEs - our economy’s engine room. It found that a pound spent on advertising by a small company benefits them eight times as much as a pound invested by a larger one.

That persuaded Chuka Umunna, then Shadow Business Secretary and Small Business Saturday champion, to speak out for advertising at a reception in the House of Commons. 

Then there’s the public. What does advertising do for the ultimate arbiters of an MP’s taste?

Well it pays for culture, media and sport. And the third Advertising Pays surveyed 1,000 people to find that the gap between what people are willing to pay, and the actual cost of the ad-funded media they receive is £187 per household per year – nearly £5bn in total.

Gavin’s time as president came to an end, but the momentum didn’t let up. James Murphy took over as chairman last summer, and looked overseas. He knew from his own experience how much business comes from foreign clients commissioning work from UK agencies.

He was convinced the resulting balance of payments surplus for advertising – that is, the amount of services we export minus the amount we import – was an untold tale of success.

Working with government data, Credos created the latest part of our economic story, Advertising Pays 4, proving James right: our balance of payments is comfortably the best in Europe. Globally it’s second only to the US.

So we explored why, interviewing global advertising leaders, gathering case studies, and surveying our top creative agencies.

Why is UK advertising so successful? They told us it’s because we make the best work. We’ve won more Cannes Lions and Grand Prix than anywhere bar the US, and according the size of our respective economies, we leave the States in the dust.

It’s because the UK is a global talent hub for advertising. "In London, you get the world", Tom Knox told us, and it flows both ways. Home-grown ad execs are spreading their knowledge and influence all over the world.

And it’s because of the Advertising Standards Authority. Even our regulatory structure – itself a UK advertising export – helps the cause, giving global brands the confidence to invest their advertising budgets here first.

So advertising’s economic story continues to grow, and the doors in Westminster continue to open. After all, the UK operates a hefty trade deficit, and advertising’s exports are set to grow 54 per cent in the next five years.

As Business Secretary Sajid Javid says in the foreword to the new report, without advertising "Britain’s business landscape would be a much less prosperous – and interesting – place."

Through roundtables and meetings with policymakers over the next few months, the AA will be making that case for advertising. Because thanks to four reports, we now know precisely how much poorer we’d be without our industries’ combined efforts. 


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