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Advertising Association

Ad-funded media saves UK households from an annual £187 deficit, says Advertising Association

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By John McCarthy, Opinion Editor

January 29, 2015 | 3 min read

The UK public vastly undervalues advertising’s contribution to media, culture and sport, according to research from the Advertising Association.

A Deloitte survey of 1,000 UK adults found that the gap between what the public is willing to pay for media, and what advertising contributes in the UK is almost £5bn - a fee of £187 per UK household, per year.

The report estimated that advertising accounts for around half of the newspaper industry’s revenues, theorising that prices would double in the absence of it, estimating a fall in weekly sales from 91 million to 20 million.

On the TV front, 40 per cent of viewers were reliant upon commercial free-to-air TV channels such as ITV, Channel 4 and Channel 5 in 2013. That year, the combined value of advertising revenue received by broadcasters was £2.6bn, accounting for two thirds of their entire revenue - just over £100 per UK household.

Furthermore, in radio, around two in three listeners would not be willing to pay a substantial fee for radio if it were not free to use.

The report read: “Free-to-air broadcasting could not exist in its current form without the financial support of advertising. TV broadcasting in the UK would lose much of its original content, and subscription costs would be prohibitively expensive for many. The impact on commercial radio would be even more far-reaching.

“Advertising reduces the cost of access to services, allowing for much wider participation and choice as a result.

Andy Duncan, Advertising Association president and chief executive of Camelot UK, said: “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 added: “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.”

Below is the advertising funding divide.

Earlier this month the Advertising Association downgraded its prediction for ad spend growth in the UK from 6.5 per cent to 5.7 per cent to reflect a more cautious outlook over the Eurozone in 2015.

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