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AA report finds 22% of UK ad agencies increased export revenues after Covid-19

The report highlights how exporting advertising services can fuel business growth

Despite the pandemic throwing a curveball at 2020, one in five UK advertising and marketing services companies have reported growth in one or more international revenue streams since Covid-19 took hold.

The findings arrive from a recent Advertising Association (AA) report, in partnership with Credos and conducted by PwC. 'Powering Up UK Advertising Exports' works to highlight how exporting endeavours can fuel business growth while reducing dependency on the UK's domestic markets. The report is part of a wider initiative led by AA and funded by the Department of Trade, to promote and market the UK's position as the global hub of advertising.

“This new analysis from PwC underlines the unique qualities of UK advertising that we must protect and promote globally," explains Stephen Woodford, chief executive of the Advertising Association.

"This is doubly-critical, given our ambitions following Brexit to work with customers around the world and for our industry to build back better and stronger from the impact of Covid-19. Our new report shows just how special our offering is – the ability to provide a complete package of strategic, creative, production and technological services of the highest quality from one easy-to-access location.”

UK advertising can compete on the global stage

  • 97% of respondents believe that the UK is a global leader of advertising services.

  • Between 2009 and 2018, the UK's advertising services exports grew by approximately 229% from £2.4bn to £7.9bn. That is an annual growth rate of 14% over the decade.

  • In 2018 particularly, the UK experienced strong growth in international business wins, which increased 15% year-on-year. This was a record high for the industry which helped it overtake telecommunications and engineering services to become the second-largest service export behind computer services.

  • The UK's surplus of exports over imports (£3.6bn) for advertising services is the largest in Europe. In 2018, £4.8bn ad services were exported to Europe, which accounted for 61% of its overall exports.

  • While 91% of respondents reported their overall revenues will be negatively impacted by Covid-19, 22% reported growth in one or more exporting revenue streams since Covid-19.

  • The key drivers of UK advertising exports include global reputation, quality of talent, creativity, global use of the English language, the UK's geographical location that enables it to transcend time zones with Asia and America, and the size and scale of the UK.

But there are barriers to growth

  • The report warns that the UK will be logistically challenged when it leaves the EU. It suggests if the UK wants to maintain and grow its exports, the government should provide clear guidance and assistance.

  • It names the biggest barrier to the export market as cost, chiefly the logistical costs of setting up operations abroad, the cost of foreign business development and the cost of competitive pricing versus local suppliers.

  • Other issues identified were legal and regulatory risks and cultural differences, but crucially the perceived barriers relating to company size were found to be overstated.

Why it matters?

  • The report highlights that exporting endeavours can fuel business growth while reducing dependency on the UK’s domestic market.

  • As the Brexit transition period comes to an end and the UK deals with the impact of coronavirus, the UK economy is in a particularly volatile condition, with analysts predicting a much deeper recession than the 2007/08 financial crash.

  • The ad industry is, therefore, a crucial player in protecting the UK's economy, and will play an important role in the positive development and economic growth.

  • In preparation for the UK’s departure from the EU, the AA believes it is essential for the government to negotiate trade agreements to ensure the UK remains globally competitive.

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