IAB Europe study: Advertising brings EU significant economic benefits

A new European report shows that every euro spent on advertising brings a 7 times bigger bonus for the GDP, encourages innovation, insures the occupation of the work force and supports investment in important services.

“Value of Advertising” is an independent study conducted by Deloitte, which has identified a series of multiple benefits generated by advertising to the global economy, civil society and jobs. It is the first report created at the EU level that isolates the economic and social contribution of advertising to the economic growth of the EU. The study was requested by the World Federation of Advertisers and supported by other partner industries and, through econometric shaping showed that advertising contributed to almost 6 million jobs in the EU and 4.6 percent in the total EU’s GDP.

Moreover, there were identified 3 key areas where advertising generated direct or indirect benefits for the European economy and the EU citizens.

The economic benefits: It is estimated that every euro spent in advertising adds 7 euros more to the GDP. Therefore, the sum spent (EUR 92 billion) in advertising in 2014 in the EU generated revenues of EUR 643 billion to the GDP, representing 4.6 percent in the total European PIB. The study shows that advertising contributes to the economy by supporting the competitiveness, through offering information to the consumer about products and services and through supporting his decision on choosing goods and services. At the same time, this means the supporting of innovation through encouraging the businesses in creating differentiated products and services, allowing them to compete with other similar businesses in the EU and worldwide.

The benefits in the workforce area: The advertising insures almost 6 mil jobs in the EU, the equivalent of 2.6 percent of the whole workforce in the EU. Jobs are distributed in 3 sections. Firstly, people employed in the advertising production represent 16 percent of the total of 5.8 mil jobs supported by advertising. The study excludes the workforce associated with the in-house produced advertising, therefore the number is reduced.

Secondly, it includes jobs associated with media and the online businesses that are financed by advertising, including journalists and content producers and also people that are working in out-of-home (OOH) or TV. This category represents 10 percent of those 5.8 mil jobs. The employees in these type of workplaces have a better job safety and a medium wage that is bigger than the rest of the economy.

Thirdly, jobs resulted as a consequence of the advertising activity. These sum the jobs from sales and the jobs that are supporting advertising activity in industries such as hospitality sector. This category also includes the roles created by the demand for products and services stimulated by advertising and covers 74 percent of those 5.8 mil jobs.

Social benefits: Advertising offers personal and social benefits by financing or co-financing media services. It insures citizens’ access to news, entertainment and communication mediums at a low cost or even for free. Those EUR 92 billion spent on advertising in 2014, financed directly different types of content. Outdoor advertising brings extra benefits to the civil society in the shape of an enhanced urban environment, while search engines help consumers cut the time and the financial cost of finding new pieces of information. Without advertising, financing any type of media would suffer. A fact that can lead to a television based only on subscription, less newspapers and reduced diversity and independence for magazines, while radio stations wouldn’t have the possibility to generate news or entertainment throughout the day. Moreover, professional sports and cultural events would need to find financial support from other sources.

Online, advertising finances massively services that EU consumers use at an extremely low cost or without any cost t all. For example, 70 percent of European citizens are intensively using email and social media services.

‘’Advertising is a vital economic engine that encourages competition, bring innovation in business and generates significant benefits to society by financing or co-financing media services, starting with news and entertainment. The political decision factors should keep in mind that restrictions imposed on advertising have important consequences from an economic, social and cultural point of view,” said Stephan Loerke, CEO al World Federation of Advertisers.

The European advertising industry requires a moratorium regarding the supplementary restrictions imposed to advertising, in order to insure that the global impact of new regulations, including the unintentional consequences, is fully evaluated. Right now the industry is worried by the fact that the Reviewed Audio Visual Media Services Directives and ePrivacy will create additional restrictions, to the disadvantage of the European digital economy and reducing the potential of creating more jobs and successful local companies.

“Advertising is essential for the work force, innovation, culture, entertainment, and supports the media plurality – key element for the democratic freedoms. The benefits are omnipresent and work for the shaping of the actual society,” also added Loerke.

The study was financed by the members of the European advertising industry: Advertising Association UK (AA), Association des Agences-Conseils en Communication (AACC), Association of European Radios (AER), European Association of Communications Agencies (EACA), European Broadcasting Union (EBU), The Association of television and radio sales houses (EGTA), Interactive Advertising Bureau EU (IAB EU), Mainostajat Finland, Organisation Werbungtreibende im Markenverband (OWM), Union des Annonceurs (UDA), Union des Entreprises de Conseil et Achat Media (UDECAM), The World Federation of Advertisers (WFA).

Find the complete study here.

Romanita Oprea

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