Deloitte’s latest estimate says advertising contributes $58 billion to the Australian economy

Advertising contributes AU$58 billion to the Australian economy, according to a new report conducted by Deloitte for the World Federation of Advertisers. 

A new report compiled on behalf of World Federation of Advertisers (WFA) has attempted to quantify the contribution of the advertising industry to gross domestic product (GDP).

Titled ‘The Economic Contribution of Advertising in Europe’, the report included European Union (EU) and (confusingly) non-EU nations, including Australia.

Conducted by Deloitte, the report estimates that, in 2014, advertising provided almost six million jobs in the 28 countries of the European Union, equivalent to 2.6% of all EU employment.

While the relationship between advertising is complex and non-linear, Deloitte places an estimated ‘GDP’ multiplier on each market to extrapolate money spent on advertising into economic contribution.

For the European Union, the EUR92 billion spent on advertising is estimated to have contributed EUR643 billion to the economy.

For Australia, the AU$13 billion spent on advertising means an estimated contribution of AU$58 billion to the economy.

 

Australian industry bodies have welcomed the findings.

“While the estimate of the multiplier effects of advertising to GDP varies from market to market, because it is impacted by factors such as the structure of the individual economy and the mix of media spend, this latest study again points to the vital role advertising plays in driving local economies,” says Sunita Gloster, CEO of the AANA. “In every case, advertising makes a hugely significant contribution to GDP and stimulates innovation in products and services.”

The three largest advertising markets, in terms of advertising expenditure, were Japan, the UK and Germany.

The research offers a breakdown of media spend by channel of the studied markets. In 2014, the biggest spender on internet advertising was the UK, which spent 43% of its advertising spend on internet advertising (including social media). Germany spent 12% of ad spend on magazine advertising, the highest spend for that medium. Finland was the biggest spender on newspapers, with 37%, and Japan invested the most in outdoor, with 14% of annual ad spend. Belgium spent the most on radio, 15%, and Japan and Hungary spent the most on TV advertising, 43% and 42% respectively.

breakdown of ad spend

Breakdown of advertising spend by channel in the studied markets (for 2014). Source: WARC as cited in ‘The Economic Contribution of Advertising in Europe’.

 

A similar report commissioned locally by The Communications Council, conducted by Deloitte Access Economics and released last year also analysed advertising spend in 2014 for the same purpose.

Titled ‘Advertising Pays’, its estimate came in much lower, putting the contribution advertising makes to the Australian economy at AU$40 billion, or 2.5% of GDP. This discrepancy can be attributed to a different ‘GDP multiplier’ being used, since the starting figure (actual ad spend) was the same, about $13 billion.

Regarding employment impacts, for which the newer Euro-centric study omitted Australia, ‘Advertising Pays’ estimated 200,000 Australian workers rely on advertising for employment, while 56,000 are employed directly in the advertising industry.

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Image copyright: michelangelus / 123RF Stock Photo

Ben Ice
BY Ben Ice ON 17 January 2017
Ben Ice was MarketingMag editor from August 2017 - February 2020