Advertising contributes $40 billion to the Australian economy per year

The advertising sector contributed 2.5% of Australia’s GDP over 12 months in 2014

Key Findings

  Economic driver

  1. For every $1 invested in advertising Australia has benefitted from $3 of economic value.
  2. Advertising is now viewed as an investment for a brand. Advertising has a significant degree of influence over a company’s financial performance and brand value is a key asset to modern Australian businesses.
  3. Of the overall $40bn in value, the economic impact of advertising by the largest industry sectors include:
  • Retail, $8.7bn
  • Motor vehicles, $4.6bn
  • Finance & Insurance, $3.9bn
  • Real estate, $3.2bn
  • Entertainment & Leisure, $2.9bn
  • Travel & Accommodation, $2.4bn
  • Government/community/public service, $1.7bn

  Employment growth

  1. As specialist skills are required, advertising supports overall skills development and technical expertise, supporting the ideas economy and government innovation agenda.

  Business value

  1. Developing brand awareness, customer loyalty and creating brand value sits at the heart of corporate strategy, with advertising playing a significant role in supporting these business goals.
  2. The total value of Australia’s top 100 brands is $128bn and therefore an asset worth investing in.

Social influencer

  1. Advertising is an established and proven powerful influencer of audience behaviour in such areas as road safety, public health and tourism.
  2. Since 1989, the Victorian road toll has fallen by over two thirds, from 776 to 249 in 2014. TAC’s ‘Wipe off Five’ campaign has helped change public opinion of what constitutes speeding – 92% of respondents now think driving at up to 65 km/h in a 60km/h zone is speeding in 2013, compared to 69% in 2001.

In Detail

The true economic power of Australian advertising has been revealed today in an independent study that values the industry’s contribution at $40 billion over a 12 month period – equating to 2.5 per cent of Australia’s total GDP (2014).

The Deloitte Access Economics report, Advertising Pays: The Economic Employment and Business Value of Advertising, is the first of its kind in Australia, commissioned by The Communications Council, peak industry body for Australian advertising agencies.

The reports reveals the $40bn economic contribution delivered by advertising is:

  • Almost as large as the productivity value of the internet and digital technologies to the Australian economy, estimated at $45bn (2013)
  • Equivalent to the annual economic boost from a major economic reform such as the National Competition Policy valued at $40bn in 2015 dollar terms
  • Larger than the size of the accommodation and food services industry, which contributed $38bn to Australian GDP in 2014.

John O’Mahony, Partner, Deloitte Australia, said: “Advertising is often overlooked as an economic driver and yet it is responsible for driving more than $40bn of growth. Advertising provides strong incentives for business to be more innovative and to offer better products and more competitive promotion in their efforts to win market share. Consumers enjoy the benefits of both competitive pricing and being better informed purchasers of goods and services.”

Jaimes Leggett, Chair of The Communications Council and CEO of M&C Saatchi Group Australasia, said: “Australia is now entering its 25th year of consecutive GDP growth. As the commodities market softens, it’s encouraging to see our services industry has a solid role in bolstering the broader economy. Globally, the Australian communications industry has consistently been recognised as among the top five countries that generate the most creative and effective work. It’s clear from this research that an investment in advertising helps to drive the Australian economy further.”

The study also revealed the advertising industry is associated with the employment of 200,000 Australians, including direct roles and those created in the supply chain and supported sectors.

The employment analysis in the report shows that the advertising sector can play a role in the Australian Government’s innovation agenda to create a greater number of highly skilled and technical roles and is a driving factor in the growth of Australian businesses.

The Communications Council CEO Tony Hale said: “This is important data for the industry as it helps us understand the major role advertising plays in driving the economy and creating jobs in Australia. It also recognises the power of advertising as a force for social good, referencing advertising’s ability to raise awareness of, and influence behavioural change around issues such as road safety, public health and tourism.”

The report examines several cases, including the Transport Accident Commission’s  Victorian campaign, ‘Wipe off 5’, which notes how advertising helped change public opinion of what constitutes speeding; with over 90% of respondents considering driving at up to 65 km/h in a 60km/h zone as ‘speeding’ in 2013, compared to 69% in 2001.  With a powerful creative idea, advertising has played a key role in changing community attitudes and behaviour.

Helping governments, political parties and businesses convey messages that resonate with the wider community, advertising is described in the report as an increasingly vital corporate strategy component. As such, advertising is seen as an inextricable contributor to the success of Australia’s top 100 brands, previously estimated to be worth $128bn.

One of the business leaders interviewed in the report, Mark Ward, Managing Director of Officeworks, said: “In a competitive market economy, brands must continually ensure their products and services are differentiated and satisfying customer needs. Advertising enables us to convey these messages to customers. But it must be aligned with the broader strategic objectives. There is nothing worse than telling a customer you’re offering a great service when it’s not good. It destroys customer trust.”

Louise Eyres, ANZ Group General Manager Marketing, said: “Advertising in its broadest form of paid, owned and earned plays an increasingly important role in ANZ’s regional business strategy. Aligning ANZ’s advertising with our broader strategic objectives and values has enabled us to build a much stronger brand that resonates with our geographically and culturally diverse customer base.  Advertising has played a key role in achieving our broader strategic goal of financial independence and inclusion through initiatives such as  GayTM, #equalfuture and MoneyMinded.”

Executive Chairman of Clemenger Communications Group, Robert Morgan, said: “The nature of advertising is changing radically in the age of digital and ‘one-to-one’ communications. But, even as it changes, its role in stimulating growth in the economy is more important than ever. This report proves how important advertising is to creating growth and employment. Indeed, advertising works!”

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