Every Euro spent on advertising powers a seven-fold boost to GDP, according to a new study by Deloitte – with advertising accounting for nearly 6 million jobs across the EU and 4.6% of total GDP.
This is the first-ever EU-wide report to isolate the economic and social contribution of advertising.
According to Deloitte, advertising contributes to the economy through its ability to support competitiveness, providing consumers with information on products and services, and helps to increase their choice of goods and services.
This then drives innovation by incentivising businesses to create differentiated products and services, allowing them to out-compete their competitors not just in the EU but around the world.
The study also adds weight to the employment argument – with the 5.8 million jobs it creates equivalent to 2.6% of all EU employment (not including those working as advertisers).
This figure is made up of people employed directly in the production of advertising (16%); jobs created in media and online businesses that are funded by advertising, including journalists and content producers as well as people working in OOH or TV (10%); and jobs created in the wider economy as a consequence of advertising activity, such as sales and hospitality (74%).
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Advertising also provides personal and social benefits by funding or part funding media services – ensuring that EU citizens benefit from news, entertainment and communications tools at a reduced cost or even for free.
Without advertising, Deloitte says, funding for all sorts of media would be reduced – which could lead to TV being increasingly based on subscription and reduced newspapers and magazines’ plurality and independence. Radio stations would also not be able to provide news and entertainment throughout the day and professional sports and cultural events would need to seek financial support from another source.
“Advertising is a vital economic engine that encourages competition, drives innovation in business and provides significant benefits to society by funding or part funding media services, from news to entertainment,” said Stephan Loerke, CEO of the World Federation of Advertisers.
“Policy-makers should be mindful that ad restrictions have important economic, social, and cultural consequences. Advertising matters for employment, innovation, culture and entertainment, and supports media plurality, which is fundamental to democratic freedoms. The benefits are pervasive and run through the fabric of society.”
Phil Smith, director general of ISBA, the voice of British advertisers said: “The findings highlight that a healthy and vibrant advertising industry is vital to our economy.
“Advertising fuels competition, advertisers sell better products and create more jobs. In turn, advertising partially funds diverse news and entertainment media and pays entirely for many free online services we take for granted, like search and social media.
“We believe European and national policy makers must assess the full range of implications when considering more restrictive advertising regulation.”
