In a comprehensive exploration of the impact of advertising on the Australian economy, commissioned by the Communications Council, Deloitte Access Economics delivers a revealing account of how advertising serves as a powerful force, shaping economic landscapes and influencing societal dynamics.
The study, which defines advertising as any paid-for, owned, or earned communication intended to inform and influence, uncovers the multifaceted dimensions of advertising and its far-reaching implications.
Generating growth and economic impact
The study highlights the substantial economic role of advertising, extending beyond direct spending. Valued at $12.6 billion in 2014, almost one per cent of the GDP, advertising emerges as a critical foundation for a market economy.
The economic benefits in 2014 alone amounted to an impressive $40 billion, rivalling the productivity value of the internet and digital technologies, major economic reforms, and surpassing contributions from key industries like accommodation, food services, and real estate.
Promoting competition and lower prices
Advertising’s greatest contribution lies in promoting competition and subsequently lowering prices. By providing information to consumers, advertising facilitates informed choices, fostering the competitive forces necessary for price reduction.
Moreover, it acts as a catalyst for innovation and improved market efficiency, compelling businesses to be more innovative, offer better products and services, and compete for market share.
Employment and social contributions
In terms of employment, advertising is a major player, supporting over 200,000 jobs in the Australian economy. The workforce includes 56,000 directly employed in advertising and an additional 47,900 in indirect employment through the supply chain. The diverse employment sectors span traditional advertising services, media, creative, digital, consulting, retail, and government.
Financial support for media platforms
Beyond employment, advertising expenditure provides crucial financial support for media platforms and the content industries associated with them. Over 100,000 people are employed in advertising-supported industries and occupations.
The report, however, refrains from addressing the hypothetical scenario of the complete removal of advertising from the economy, acknowledging the difficulty of predicting the varied implications on employment.
Insights for business and government
The study concludes by emphasising the evolving role of advertising in a digital age, where access to information shapes consumer behaviour. Key insights underscore the importance of advertising in corporate strategy, the necessity of creativity for emotional connection, the value of balanced channel diets, the need to systematically track brand perceptions and financial performance, the impact on employees and suppliers, and the role of consistent, authentic advertising in supporting public policy objectives.
In essence, the report paints a comprehensive picture of advertising as not just a promotional tool but a dynamic force steering economic growth, innovation, and societal well-being. Its impact resonates far beyond the realm of business transactions, showcasing the enduring significance of advertising in an ever-evolving world.