Lessons from Lead: how our industry can drive growth across the UK

Siobhan says: “According to advertising’s think tank Credos, 56% of all small businesses don’t use marketing or advertising and that has to be a huge wasted opportunity for UK plc. If we can unleash the wave of creativity which remains untapped, we can not only boost growth and productivity but, just as importantly, build bridges to help Britain coalesce into one space. That is a great target.”

Siobhan’s panel also included Mayor of the West Midlands and former John Lewis managing director Andy Street who articulated how the region is rebuilding its economy and driving growth, by drawing on its heritage as birthplace of the Industrial Revolution. He highlighted its openness to new thinking and how the creative and tech industries are thriving, with him proudly stating that his region has more tech start-ups than other similar centres outside London.

According to BIS Business Population Estimates (2017), there are 5.7 million SMEs in the UK, 81% of which are based outside of London. They form the majority of businesses in the regions and nations and 99% of all businesses in the UK. They also represent 60% of private sector employment (15.7 million people) and 47% of all private sector turnover, with a combined annual turnover of £1.8trn. However, SMEs only account for around 18% of total advertising spend, even though they contribute nearly 40% of UK turnover. And they export less than SMEs elsewhere in the EU.

So, what the barriers are to SMEs advertising? Karen Fraser, director of Credos highlighted these perceived barriers at Lead, noting that an SME Survey conducted by YouGov on behalf of Credos in August 2017, found that 61% of SMEs that do not advertise state it is too expensive for their company. 52% believe their company does not have the time or resources to advertise – suggesting that financial constraints are the main concern for businesses, not advertising itself. If we are to grow, this must change and we are determined to encourage this change. This is all the more important when you consider a second report from Credos, advertising’s think tank, Advertising Pays 2 which found that £1 spent on advertising benefits an SME eight times as much as a larger firm. Advertising makes financial sense for SMEs and it makes sense for the UK economy.

We are proposing a number of initiatives to address the knowledge and understanding gaps among SMEs across the UK regarding our industry:

• The creation of a fiscal incentive for SMEs investing in advertising
• The establishment of industry-funded knowledge hubs in the nations and regions for SMEs looking to grow their businesses through advertising
• The development of an industry campaign to incentivise SMEs that have not advertised before to do so.
• And we intend to launch pilot advice hubs in Scotland and the West Midlands.

In late 2017, the AA launched collaborative research – Advertising Pays: World Class Talent, World Class Advertising – in partnership with LinkedIn and, as consequence, our A Great Advert for Britain campaign. The report revealed that more than half (57%) of advertising’s UK workforce is based outside of the capital, with Manchester the largest regional ad industry hub.

As a follow-up, our team hit the road interviewing industry creative talent from the likes of ITV, MediaCom, and Bauer Media for a new film in our campaign. We wanted to bring to life just how the nations, regions and cities across the UK are developing their own specialist identities and so, with this in mind, the team visited Bristol, Birmingham, Liverpool, Manchester, Newcastle and, up in Scotland, Edinburgh and Glasgow. You can see our new film here.

The short film is a record of the incredible advertising talent we have across the country and which is a vital part of how we can generate economic and social growth across the UK.

Chief executive of Channel 4, Alex Mahon, was at Lead in her first public speaking appearance since taking up her role, pointed to the Brexit referendum having exposed differences in the UK between regions and generations, and that this poses questions for us all as a country – including in the realm of public service media. These differing perceptions of the UK also extend to the sense of an economic, social and growth gap between London and the regions. The advertising industry must counter this sentiment in a post-Brexit UK by making sure we are in the vanguard of sectors not just seen to be do our bit, but actively doing all we can to support growth across the UK.

We are confident advertising is well positioned to be recognised and supported as an essential engine of the economy. This year, we will champion the importance and vibrancy of the advertising industry right across the UK and its huge potential to boost SME and export growth. Advertising is a vital partner to UK business and a means to build and scale companies of all sizes, and so, by extension, the UK economy to greater success and achieving all it can be.

As the sector faces unprecedented challenges, we will continue to make advertising’s case to the UK business community and to Government for continued recognition of the vital role of advertising in the UK economy over the months to come.

We welcome all readers of The Drum to join us as we progress our SME plans this year.

Stephen Woodford is chief executive of the Advertising Association. He tweets at @StephenWoodford