The Economics of London's Advertising Sector

London's advertising sector contributes a whopping £100bn to the UK economy. With the majority of advertising firms based in the capital, the economic impact of this industry is now being recognised.

Advertising Spend offers Returns

The latest report from the Advertising Association (AA) says spending on advertising increased by 5% in the final quarter of 2013. The report also highlighted some interesting facts about advertising spend. For every large brand spending £1 on advertising, they receive £6 in return revenues. Every small to medium size business can expect £8 in returns, making advertising an extremely good investment for any business enterprise.

London's Advertising Sector

The Advertising Pays report prepared for the Advertising Association by Deloitte reports "advertising fuels the UK economy". GDP receives a six-fold benefit for every pound spent on advertising due to increased consumer demand and expenditure.

Advertising's Major Players

The majority of UK advertising firms are headquartered in London, and it is here the engine-room of the advertising sector truly grinds away. Stellar British firms with international reputations abound including M&C Saatchi, Chime Communications and Bartle Bogle Hegarty. Major New York agencies including Young and Rubican and Burston-Marstellar, DeVito Verdi, and McCann Erikson all have London office addresses. Tokyo advertising giants JWT Japan and Dentsu run significant operations from London.

The Biggest Creative Industry in the World

The economic success of London's advertising sector relies on the intense and vibrant creative community London offers. With the largest creative services industry in the world located in the UK, London provides both inspiration and talent to the dynamic advertising industry. Without a pool of talent, ready to create some of the world's most amazing adverts and campaigns, the industry would cease to exist.

Jobs and Secondary Economic Benefits

The economic benefits of London's advertising sector include fantastic jobs for graduates in culture and arts based communication degrees, and the opportunity to work at the top-end of this profession. The industry adds a touch of glamour to the world-class London financial centre. With many intense creatives residing in the capital, the demand for trendy restaurants, expensive and fashionable clothing to wear, and extensive travel and tourism opportunities, means advertising has a secondary effect on London's economy.

Cultural Benefits from the Advertising Sector London's advertising sector has a cultural benefit many are starting to quantify into economic terms. The sector writes into every campaign expressions of "Englishisms" and idiomatic references to London, paints iconography belonging to England into many of the campaigns, and pays attention to spending trends and customer habits. With that knowledge, or 'pulse' (as many like to call it) inhabiting London's creative-scape, there's a promotional economic benefit, where the best of Britain is exported.

Advertising's Contribution to London's Television Excellence

Year-on-year, many London advertising agencies win prestigious international awards for excellence in the industry. Advertising spend contributes 29% to total UK TV revenues, the other principal sources of funding being the BBC licence fee and commercial subscriptions. This means many Freeview and commissioned programs written by London scriptwriters are funded through advertising, helping London and the counties receive a range of diverse and quality programming. Where would we be without Downton Abbey?

London's Advertising Sector brings Economic Benefits Regionally

As with the television sector, UK newspaper and magazine businesses would be unrecognisable without advertising. Approximately two-thirds of newspaper revenues come from advertising, enabling a daily and localised supply of news and comment.

Advertising supports local communities through funding local radio and printed media - in many cases providing 100% of that funding. Over 500 local commercial and community radio stations receive a significant portion of their revenue from advertising. Regional and local newspapers read by 33 million people a week would not survive without revenue from advertising. Advertising also supports independent cinemas and the independent film production industry through awards, bursaries and direct funding.

The perception that advertising is frivolous and a waste of money is changing rapidly. Many realise that advertising actually assists the market to function efficiently by informing consumers about the value of the products they are buying. Advertising companies pick up on market trends and offer innovative insights into any business they deal with. Engaging the services of an advertising firm has the potential to be incredibly rewarding and enjoyable for any business needing a fresh perspective on their successes.