Monday 16 October 2017

Watch this space: how the ad industry boosts our economy by €5.3bn a year

Sarah McCabe

Sarah McCabe

THE advertising industry does more for Irish consumers than we realise. It facilitates everything from the broadband in our homes to the supermarket price wars beloved by shoppers, according to a new industry report, which for the first time quantifies the value of advertising to the Irish economy.

The information contained in advertisements, it found, allows consumers to make more informed decisions and promotes faster take-up, supporting market efficiency, investment and expansion. It also pays for public works that would otherwise cost taxpayers millions.

The net effect is that every €1 spent on advertising results in a €5.7 contribution to Irish Gross National Product.

This means the economy gained €5.3bn from the €938m spent on advertisements last year.

We see evidence of this stimulus every day. It is estimated that 400,000 households would not yet have broadband access without advertising.

In the country's supermarkets, price wars spurred by advertising saved shoppers nearly €550m last year alone.

The intense campaign launched by SuperValu last February is a good example – it was built solely around the low price points of the chain's own-brand range.

Advertising drives like this are one of the main reasons that food and non-alcoholic beverage prices are down 6.3pc since 2008.

In Dublin, cyclists might not be aware that the popular Dublinbikes scheme owes its success to the humble ad.

The cost of installation and maintenance of the bikes and their stations is covered by advertising company JCDecaux, providing a valuable service for Dubliners and visitors, in return for advertising space in the city.

With more than 31,000 active long-term subscribers, Dublinbikes has been a key contributor to the capital's sustainable transportation policy.

An estimated five million journeys have been made using the scheme. This year JCDecaux signed a new contract with Dublin City Council to expand it, while similar schemes will be launched in Cork, Limerick and Galway next year – in part funded by advertising from Coca-Cola.

Alan Cox, chief executive of Core Media, said the Government needs to better incentivise advertising if it wants to maintain these economic benefits.

"Advertising is clearly a strategically important industry," said Mr Cox. "Policymakers should consider two-year tax breaks – our research shows this would offer a serious economic kick-start."

The new findings also sheds light on the complex and co-dependent relationship between advertising and the Irish media industry, revealing a changing love affair.

Advertising directly supports 7,500 media jobs, provides a third of all revenues to Irish newspapers and a fifth of all television revenues.

This means that advertising has an important role in ensuring the existence of a free press – with the results that any decline in spending has a direct impact on the ability of 'the fourth estate' to do its job, which is essential to a working democracy.

This puts the 40pc slump in advertising expenditure since 2007 into context.

"Media content is already suffering as a result," said Mr Cox. "Advertising spending supports the content-creators who give us our news."

BENEFITS

Some of this slump in revenues has been blamed on the recession while some has been blamed on the migration of advertising to digital channels, where it often benefits technology companies rather than content-makers.

Search engine providers received half of all money spent on digital advertising last year.

Digital ad spends are also still relatively small, accounting for just €151m of the total €938m spent last year.

"But the industry is at a tipping point now – digital ad spend is going soar in the next few years as advertisers and companies start to truly realise its value," said Mr Cox.

"Mobile advertising will be huge," he added. "Media companies are focusing on news delivery through mobile devices for a reason."

The report also shed an interesting light on the media consumption habits of Irish people.

Newspaper readership rates in Ireland are one of the highest per capita in Europe – 81pc of the Irish adult population reads a printed newspaper regularly.

Irish Independent

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