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Health of UK’s culture, media and sport revealed to be dependent on advertising revenues

New research by Deloitte has revealed that without advertising, much of the UK’s media, culture and sport would be unsustainable in its current form.

03/02/2015

The report – Advertising Pays 3examines how advertising spend and brand sponsorship impacts the media, entertainment, arts and sport that people enjoy every day.

Deloitte’s analysis shows that people value access to these advertising-funded services at nearly £10 billion – a figure that strongly suggests we are not able (or willing when set against other priorities) to meet the full cost of providing them. By lowering the cost of media and culture, advertising brings it within reach of millions more people than would otherwise be the case.

The Deloitte report estimates that advertising accounts for around half of the newspaper industry’s revenues, so it could be argued prices would have to be twice as high in the absence of advertising. Based on Deloitte’s estimates of how consumers would react to a price increase, we estimate newspaper sales could fall from 91 million to as little as 20 million each week. In consumer magazines, the absence of advertising would lead to some 378 million fewer magazine sales each year and Deloitte argues that it is hard to see how the commercial radio sector could survive in its current form.

The Advertising Association estimates that the gap between what people are willing to pay and the true cost of the advertising-funded media they receive is almost £5 billion (1), equal to £187 per household per year. (2) Household spend on recreation and culture (3) is already the third highest weekly outgoing - ahead of spend on food and non-alcohol drinks, household goods and services and clothing and footwear.

Paul Bainsfair, Director General, IPA says: “This report is a further contribution to the existing evidence of the vital role advertising plays in the UK economy. It outlines how the UK’s world class creative and cultural sector thrives through the huge revenue created by our industry; without advertising the cultural and recreational activities  that UK is justly famous for, would be unsustainable.”

Andy Duncan, Advertising Association President and CEO, Camelot UK says: “Of course, businesses advertise to build brands, drive sales and fight the competition – not to fund our media. But the unintended consequence of advertising is a massive contribution to the TV we watch, the newspapers we read, the attractions we visit and much more. Without advertising to fund them, it is clear that the average UK household would be unable or unwilling to cover the shortfall.”

Sajid Javid MP, Secretary of State for Culture, Media and Sport says:“The advertising industry makes a significant contribution to our economy. Its funding is vital for the long-term growth of the UK's creative sector and ensures we are able to provide the quality recreational and cultural services that people value so highly."

Download the full report.

1. The report focuses on television and radio, online services, newspapers and magazines – which benefited from £14.337bn of adspend in 2013 (AA/Warc Expenditure Report). The report estimates the total individual value attributed to advertising across these channels is £9.4bn.

2. ONS, 26,414,000 UK households in 2013.

3. ONS, Family Spending – 2014 edition (02.12.14) 

Last updated 03/02/2015


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