First EU-wide study shows value of advertising for economy and society

Together with the World Federation of Advertisers (WFA) and other partners, the organization Werbungtreibende im Markenverband (OWM) commissioned Deloitte to conduct a study on the economic and social value of advertising. This first EU-wide study provides scientific evidence that advertising can boost economic growth. It shows that every euro spent on advertising contributes on average seven times to gross domestic product (GDP), that advertising drives innovation, promotes employment, safeguards media diversity and helps finance online services that are significant for society.

The core findings of the study are:

Economic effect: Each euro invested in advertising contributes an average of around 7 euros to GDP. This means that the 92 billion euros spent on advertising in the EU in 2014 contributed 643 billion euros to GDP, which is 4.6 percent of Europe's total GDP. In Germany, the 19.4 billion euros invested in advertising in 2014 represents a GDP contribution of 132 billion euros and is equivalent to 4.7 percent of German GDP.

Advertising has an impact on the entire economy: Advertising boosts competition by providing consumers with product and service information, thus expanding their choice. And advertising acts as an innovation driver by increasing the incentive to develop new and different products and services and thus outperform competitors.

Labor market effect: The advertising industry creates almost 6 million jobs in the EU - equivalent to 2.6 percent of the European labor market. In Germany, the advertising industry creates 847,000 jobs, equivalent to 2.1 percent of the workforce.
These jobs exist in the following three areas:

• jobs in the direct production of advertising. These account for the equivalent of 16 percent of jobs attributable to advertising activities in the EU. (Germany: 27 percent)
• Jobs financed via advertising and created by media and online companies (e.g., journalists). These jobs account for the equivalent of 10 percent (Germany: 12 percent) of total employment.
• Jobs created as an indirect consequence of advertising activities throughout the economy. These range from jobs in sales to services ancillary to the advertising industry, as well as jobs created by increased demand in the wake of advertising activities. The share of these jobs is 74 percent in the EU and 61 percent in Germany.

Social Effect: Advertising creates multi-layered benefits for society as well as the individual. Advertising finances media in whole or in part. If this pillar of financing were to disappear, media diversity would be restricted and user costs would rise. Professional sports and cultural events would have to find other sources of financial support without sponsorship. In the same way, outdoor advertising provides additional social benefits by improving the urban environment. In the online sector, advertising largely finances services used by all sections of the population, such as e-mail services, search engines and social media offerings.

Tina Beuchler, Chairwoman of the OWM: "Advertising is a very crucial economic driver that boosts competition, promotes innovation and creates a large number of jobs. At the same time, advertising offers a high benefit to society. It supports media diversity, which makes an essential contribution to our democratic social order, and secures the existence of many important online offerings through advertising funding. Political decision-makers should take into account that advertising restrictions entail significant economic and social consequences."

Joachim Schütz: OWM Managing Director: "Politicians still prefer to discuss new restrictions on corporate communications rather than recognize the positive economic effects of advertising. This is also shown by the Brussels plans for the ePrivacy Directive, which mean very negative effects up to and including the end for many digital business models. The results of this Europe-wide study now succinctly demonstrate the multi-layered and great importance of advertising for the economy and society. A policy that wants to create future-oriented framework conditions must not simply ignore these positive effects. Further restrictions or advertising bans are the wrong way to go."

About the study:

The study "The eocnomic contribution of advertising in Europe" was conducted by Deloitte London on behalf of the World Federation of Advertisers (WFA), the organization Werbungtreibende im Markenverband (OWM) and other partners in 2016. As part of this first EU-wide study, Deloitte developed and applied an econometric model based on WARC data from 17 years (1998-2014) and 35 economically strong markets. The study takes a top-down approach.

You can find the study and an infographic for download at http://www.owm.de/index.php?id=350.

More info on the study at Valueofadvertising.org

The organization Werbungtreibende im Markenverband (OWM) is the association of advertising companies in Germany. It represents the interests of its more than 100 member companies in all relevant areas of marketing communication vis-à-vis the media, agencies, politics and in media research. The OWM stands up for the freedom of advertising and advocates framework conditions that enable its member companies to advertise as efficiently and effectively as possible. Overall, the association's companies invest more than EUR 8.5 billion a year in communications and advertising.