The UK advertising industry makes a £4.7bn contribution to the nation’s exports, making it the third biggest service industry behind just computer services and telecommunications, according to figures from the Office of National Statistics. And the Advertising Association expects that contribution to grow by 54% over the next five years to £7.2bn, outpacing growth in both the wider creative industry and the overall economy.
Not only that but the UK exports more ad services than it imports – at £1.6bn. That makes the UK figure the highest in Europe, five times the French figure of £327m. And second only behind the US globally, which has advertising exports of £2.7bn.
Speaking on the report’s findings, James Murphy, chairman of the Advertising Association and founder and CEO of creative agency adam&eveDDB, says: “It’s time UK advertising was recognised as a massive export success.
“The new data is proof that world-beating talent, award-winning creativity, digital leadership and a gold-standard self-regulatory model have built UK advertising into an exporting powerhouse that will continue to deliver for the economy.”
Previous studies by the Advertising Association and Warc have shown that for every £1 spent on advertising it returns £6 to UK GDP, contributing a total of £100bn in 2011. Total ad spend is expected to break the £20bn barrier this year.
Undervaluing advertising
Yet Tim Lefroy, chief executive at the Advertising Association, says advertising’s deep contribution is typically undervalued, particularly because a strong advertising industry helps marketers build brands on a global scale.
“Our agencies are exporting some £4.1bn of services, but that’s just the tip of advertising’s export iceberg. It funds UK content that is then sold into global audiences. It builds strong brands, more able to succeed in overseas markets,” he says.
One example explored in the report is creative agency Karmarama’s work with Costa Coffee. While a decade ago the brand was still very much focused on national expansion, there are now more than 1,000 Costa coffee shops trading in nearly 30 countries outside the UK.
Costa’s international sales are growing rapidly, now accounting for more than 20% of total revenue. Careful branding has played an important role in this expansion, says Carol Welch, brand and innovation director at Costa.
“Telling the inspirational story of Costa and its authentic Anglo-Italian roots in an emotionally engaging way has been critical in establishing our brand outside of the UK,” she comments.
Besides allowing a brand to expand into international markets, creative advertising can also boost a business’s commercial success. A 2010 report by the Institute of Practitioners in Advertising examined 213 case studies of advertising campaigns from major companies, and discovered that the campaigns that receive creative awards are 11 times more efficient at creating market share growth.
Luckily for the UK, British advertisers seem to excel at creativity. UK companies have won more Cannes Lions in the last decade than any other country apart from the US, and the number of Cannes Lions won by the UK increased by more than 90% between 2010 and 2015.
One company that has been convinced of creativity’s positive effect on the bottom line is McDonald’s.
“We’ve seen ROI 54% higher with creative that wins Lions than creative that doesn’t.”
Matt Biespiel, senior director of global brand development, McDonald’s
Building awareness
All these signs are positive, but Karen Fraser, director at Credos, believes there is one hurdle holding the industry back – a persistent lack of awareness of the industry’s importance among policy makers.
She explains: “There needs to be an awareness and appreciation of the advertising industry among MPs and the House of Commons. We need to engage with people who can most influence the industry’s outcome, either for good or for bad. They have to fully appreciate how good we are at creativity and how it can positively affect business.”
A lack of awareness, for example, could have a negative impact on the industry’s ability to attract and retain international talent.
“It’s about making sure that we have access to diverse talent and those that need to can stay here. Within the current political context we don’t want to see anything restricting free movement.”
Karen Fraser, director, Credos
It seems clear that the industry has plenty to shout about, but has perhaps been too shy to do so. To fuel further growth, industry-wide collaboration will become a more important part of reaching that goal.
As the Advertising Assocation’s Lefroy concludes: “Beyond our balance of payments we enjoy a clear advertising advantage on the global stage. All the more reason for policy-makers to work with us to ensure that our contribution is understood and protected.”
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