On the Value of Advertising

Blitz Magazine, March 2000

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As soon as the first issue of Blitz came out, back in 1997, I started getting calls asking, “Do you know what the Canadian advertising industry is worth, or do you know anyone who does?” Ever the professional, my response was always “Nope”.

Now we know. The Institute of Canadian Advertising finally had KPMG conduct a study (based on 1997 stats). The results surprised everyone, including industry insiders.

The study reports absolute expenditures of $14.5 billion. This is over 1% of Canada’s GDP and comes from industries and organizations that use advertising, the companies that create it, the media that carry it, and related industries.

As Institute of Canadian Advertising president Rupert Brendon notes: “This is a lot of money circulating through the economy, especially when you add the multiplier effect that kicks in as advertising helps businesses grow.”

The advertising sector accounts for 212,000 jobs, or 1.7% of all jobs in Canada—139,000 in direct employment, 73,000 in related services. The value-added to the Canadian economy is $11.4 billion—$7.5 billion in employment income and $3.9 billion in business income (direct and indirect). This is greater than the financial contribution from such sectors as insurance, real estate, accounting and legal services.

“It also matters where the money goes,” says Brendon. “For a lot of Canadian industry, a high proportion of the money leaks off-shore. In the advertising sector, 80% stays at home. Advertising is a driving force in the economy. This news, from respected and independent sources, shows that advertising is far more significant and positive than some detractors would have us believe.”

Note the qualifier. It’s funny how people in the ad biz are always on the defensive, apologetic for a whiff of shadiness hovering over their industry—the perception that there’s something low-rent about the business.

At a school reunion a few years ago, I asked someone what had become of a classmate. She replied: “Oh, he did really well at Yale, but then he went into advertising.” You tell someone you’re writing an annual report, they say ‘Oh!’. That you’re working on an ad campaign for toilet paper, they say ‘Oh.’ As if you’ve fallen from the rank of Chief Surgeon to that of Hospital Janitor. 

Advertising is essential—businesses can’t compete, or survive, without it. But it is interesting to note that even those in the industry don’t understand how important it is. You would be astonished if I told you who has told my sales staff that they never advertise and that they rely on word of mouth to generate new business and stay ahead of their competition. These are people whose incomes, and those of their employees, are derived solely from creating or selling advertising and related services. It’s inexplicable. A head-shaker.

Perhaps KPMG should study this perception—that advertising is somehow inferior as a career choice, a communications medium and a business practice. Clarity would be helpful.

 

 

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