*oredo vwuhqjwk dqg uhjlrqdo jurzwk a blueprint for … · government fiscal and industrial...

A blueprint for how advertising can drive the UK’s industrial strategy 1

A blueprint for how advertising can drive the UK’s industrial strategy

5

6

13

19

23

The Advertising Association’s response to the Green Paper on Building the UK’s Industrial Strategy

Contents

Executive Summary

Advertising is a powerful driver of sustainable growth and key to the UK’s industrial strategy

Growth Lever: Drive productivity and regional growth by helping SMEs to connect with new customers

Sector Deal: Secure and extend the UK’s leadership as a centre of excellence for advertising services

Conclusion and next steps

1

2

3

4

3

“Advertising is the oxygen of a modern, innovative and dynamic economy. Our advertising and media sector has long been a strategic asset for UK plc, attracting talent and investment from around the world and establishing itself as one of the truly global success stories of British business.

As it develops its Industrial Strategy, we believe there is a double opportunity for the UK Government by focusing on advertising – the first to stimulate the right kind of growth in the domestic economy and the second to strengthen the UK’s position as a global centre of excellence and leader in exports for advertising services.

Together, we believe these measures to be some of the most effective levers Government can pull as it seeks to create ‘the conditions where successful businesses can emerge and grow’ - supporting employment, regional growth and exports and making advertising an even stronger asset for post-Brexit Britain.”

Stephen Woodford, Chief Executive, Advertising Association

Global strength and regional growth: A blueprint for how advertising can drive the UK’s industrial strategy 4

Without promotion, something terrible happens. Nothing.

P.T Barnum

5

34

120£

bn 1,000,000

£4.3bn£21bn

120£

bn 1,000,000

£4.3bn£21bn

12

INCREASED

GROWTHREGIONS

SUPPORTED

PRODUCTIVITY

ENHANCED

HIGHER PAYING

JOBSEXPORTS

BOOSTED

120£

bn 1,000,£4.3bn£21bn

JOBS SUPPORTED

INVESTED ECONOMIC ACTIVITY

INEXPORTS

Two strategic opportunities for the Government’s Industrial Strategy i. Advertising as a lever for regional growth ii. UK as a global centre for advertising

Potential benefits to UK plc of this proposal

Next steps: Research and data collection

Executive Summary

Advertising is a valuable UK asset

000

Global strength and regional growth: A blueprint for how advertising can drive the UK’s industrial strategy

6

Advertising should be thought of as economic infrastructure. It is how businesses connect with their customers and is as fundamental to their success as the means to move goods and services around the country. Supporting advertising will provide Government with a key lever to drive the UK’s industrial strategy and create the conditions for businesses to emerge, grow and invest in the long term future of Britain.

Traditionally advertising has involved three main constituents – the companies that produce products and services they want to sell, the agencies and production companies that create campaigns to communicate the benefits of these products and services, and the media that carry these campaigns to people. Today, advertising campaigns rely on a diverse supply chain from market research firms and data scientists, to tech businesses and content creators. The UK is a leader in the development and use of these modern ‘advertising, marketing and promotional’ services (‘AMP services’). For the sake of simplicity throughout this document, we’ll use the term ‘advertising’ to refer to all these activities (specific data point references will be included in footnotes).

The advertising sector supports 1 million jobs in the UK. Domestic investment in advertising services was £21.1 billion, and growth in advertising spend remains strong at 4.4% in 2016 (the initial forecasts for 2017 are 3.2%). The UK is the largest advertising market in Europe, and the fourth largest in the world after the US, China and Japan. Given the concentration of expertise, it is not surprising that the UK is a large exporter with £4.3 billion of advertising services exported in 2015 - by far the largest in Europe and at the global level second only to the United States. While this is already significant, the industry sees a real opportunity to expand exports into growth markets in the rest of the world, in particular the US, Asia, Middle East and sub-Saharan Africa through future trade agreements post-Brexit.

Advertising’s direct contributions in employment, domestic economic activity and exports only represent a fraction of its total value, substantial though they are. Advertising is different to many other sectors, even those in the wider creative industries, because it creates very strong multiplier effects on the general economy. Research by Deloitte for the Advertising Association over the last five years (and recently replicated at EU and global level) has shown that for every pound invested in advertising more than six are generated in the general economy. Therefore, the £21.1 billion invested in advertising in 2016 contributed more than £120 billion to the economy. This impact can be explained by the multiple positive economic and social outcomes that advertising creates.

1 Advertising is a powerful driver of sustainable growth and key to the UK’s industrial strategy

What is advertising?

How big is it?

How important is it in the UK economy?


firms spend

Increased Productivity

SustainableGrowth

InnovationBrand-ledeconomy

Exports

on advertising£21.1bn*

resulting in

contribution to£120bn

GDP

Global strength and regional growth: A blueprint for how advertising can drive the UK’s industrial strategy 7

* 2016Sources: AA/Warc Expenditure Report; Deloitte

8

Why is boosting advertising key to delivering the UK’s industrial strategy? Advertising brings specific, immediate benefits – from funding for media and sport to ensuring consumers get the best possible price and choice when buying a product. These short term benefits are clear and well documented. However, there are also structural benefits for an economy where advertising is used to create strong brands. There is a clear link between investment in brands and higher levels of innovation and greater returns on that innovation, which leads to higher productivity, better paying jobs and stronger exports. For more detailed information, please see Advertising Pays 1: How Advertising Fuels the UK economy.

The UK already has a world-beating advertising services sector. Reinforcing this position will be important, but the real opportunity for British businesses, and our economy more widely, is to exploit this competitive advantage. This is where UK advertising can help realise the Government’s ambition to create “the conditions where successful businesses can emerge and grow”.

The Government’s focus on a ‘vertical’ sector deal for the creative industries, including advertising, is welcomed. However, we must also look at the ‘horizontal’ levers that will incentivise the right business activities today, to create the right kind of economy in the future. We believe incentivising businesses to build brands and connect with new customers is good for them and good for Britain.

We would therefore advocate an industrial strategy with ‘vertical’ measures to support specific sectors, and ‘horizontal’ measures which drive the general economy in a direction which boosts productivity, innovation, exports and sustainable growth across the regions:

Reinforce the UK’s strengths through sector deals:

Utilise the UK’s strengths to drive the economy:

• Creative industries• Life Sciences• Industrial digitisation• Automotive• Etc.

• Incentivise investment in advertising services• Incentivise investment in R&D• Build digital skills• Etc.


http://www.adassoc.org.uk/wp-content/uploads/2014/09/Advertising_Pays_Report.pdf

9

We envisage two packages of measures – one focused on stimulating the right kind of growth in the domestic economy (a horizontal growth lever – part of wider Government fiscal and industrial strategy), and one focused on strengthening the UK as a global centre of excellence for advertising services (a vertical sector deal – as part of the creative industries sector deal, or as a separate sector deal).

Growth Lever: Drive productivity and regional growth by helping SMEs to connect with new customers Practically this would mean targeted measures to incentivise SMEs to invest in advertising earlier and more actively, ensuring that this boosts economic activity (notably in the regions) and is revenue-positive for Government over the medium term.

There are three main inputs and three expected outputs, those being:

What do we need to do?

£

Awareness

Incentives

Advice

Productivity

Exports

Regionalgrowth


10

Sector Deal: Secure and extend the UK’s leadership as a centre of excellence for advertising services The objective is to ensure Brexit does not become an opportunity for the UK’s advertising competitors abroad to capture business but instead becomes a catalyst for global growth in UK advertising services. Practically the industry would propose a close partnership with BEIS and DIT to better highlight the benefits for foreign companies choosing the UK as their international advertising hub, support a UK skills drive, and use new trade deals to reinforce its attraction.

Boostskills

Tradedeals

PromotingUK

UKleadership

Inwardinvestment

Serviceexports


11

These two proposed packages are particularly targeted at key Government priorities – supporting growth across the UK, delivering high value jobs, boosting productivity,and building long term sustainable businesses. Our proposals directly support anumber of the key pillars identified in the Green Paper.

Pillar 1 Investing in science, research and innovation

Investment in research and development will ensure we can lead the world in developing the innovations of tomorrow. Investing in developing this IP into valuable brands is essential to ensure UK companies take the next step and create sustainable value from their R&D investment. UK businesses need to not just innovate better than global competitors, but to out-communicate them as well.

Pillar 2 Developing skills

The UK advertising sector excels in producing people with a range of creative and digital skills. Many roles do not require university degrees, and the industry sees great value in continuing to develop UK technical education. The industry wants to explore how to better support this effort through apprenticeships and research projects to identify regional and national skills shortages and how to remedy them.

Pillar 4 Supporting business to start and grow

This is the core of our proposal. Through industry investment in regional hubs, first-time advertiser incentives and Government action to stimulate investment in advertising, the UK can be the best place for SMEs to emerge and grow. Our proposed measures will remove the barriers holding back SMEs from advertising and building stronger, more sustainable businesses.

Pillar 6 Encouraging trade and inward investment

As with other professional services, UK advertising punches above its weight as an exporter. Exports (primarily through provision of services by entities based in the UK to entities not based in the UK) total £4.3 billion, second only to the United States. The greater opportunity, however, is in leveraging the strength of the UK based advertising industry to support SMEs targeting new export markets.

How is it linked to the industrial strategy?


12

Pillar 8 Cultivating world-leading sectors

The creative industries is already one of the UK’s five ‘world leading sectors’ and the importance of advertising services is well recognised. Over 70% of all investment in advertising directly supports the creative industries, with additional investment from direct sponsorship of the arts, sport and culture. Importantly, there are skills interchanges between advertising and the wider creative sector (notably around digital media and TV production) which benefit both. Securing the success of the creative industries means securing the success of the advertising, marketing and promotion services which underpin and complement them.

Pillar 9 Driving growth across the whole country

While much of the advertising industry is centred around key UK cities, not just London, the industry has focused in the consultation on measures which will particularly boost growth in the regions, both of advertising service companies and the businesses which use them. National measures focused on driving SME growth (which are predominantly in the regions) together with the targeted regional investments around hubs can ensure the benefits of advertising in post-Brexit Britain are felt by all across the UK. Importantly regional media will be one of the main beneficiaries, reinforcing their success and their important role in serving and championing their local communities.

In the following two sections we describe the proposed measures and expected outcomes in detail.


13

Advertising benefits the economy and incentivising its use will help to structure the UK economy for long term success. Interestingly, research has shown that investment in advertising by small and medium sized enterprises (SMEs) is even more powerful than similar investments by larger companies. Using this learning, the AA has devised a package of measures that industry and Government can implement under the industrial strategy to deliver long term sustainable growth.

Research in this area has used the standard BEIS definition of an entity with up to 250 full time employees. This is the definition used in this paper unless otherwise stated. We define micro businesses as 0-9 employees (Turnover < £1 M), small businesses as 10-49 employees (Turnover £1-20 M) and medium sized businesses as 50-249 employees (Turnover £20-25 M).

Research by Deloitte has shown that £1 invested in advertising benefits an SME eight times as much as a larger firm, due to their ability to connect with new customers and kick start more rapid growth over the short and medium term. It creates a virtuous cycle of investment and revenue growth which can turn a small start-up into a global brand. The UK already has a number of success stories:

2 Growth Lever: Drive productivity and regional growth by helping SMEs to connect with new customers

What do we mean by an SME?

What is the impact of an SME advertising?

case study: one case study: two

Incredible Kids was set up by entrepreneur and mother of five, Samantha Corbin with a mission to provide amazing and affordable childcare. The Derby-based business turned to radio advertising to increase intake and saw registrations rise 20-30% in the first year. Radio also gave their business a personality - people started singing their ‘jingle’ when they came to visit. Now in its third year of advertising, Incredible Kids changed strategy in October to advertise a new nursery site and by February was at 60% capacity.

Plusnet - the pride of Yorkshire Incredible KidsPlusnet is a niche broadband provider, competing against some of the UK’s biggest advertisers. Unable to compete on price or technical innovation, it has kept growing by clearly articulating the brand’s Yorkshire values, developing great advertising and rigorously evaluating its results. Plusnet estimates that advertising has delivered revenue equivalent to over £4 for every £1 spent - £193m of incremental revenue over the past five years.


14

case study: three

case study: fiv case study: six

case study: four

Digby Brown started its advertising journey with STV in 2013, sponsoring Sport News before becoming title sponsor of the National Weather. “It Matters to Digby Brown” drove differentiation and competitive advantage, allowing them to open three more branches across Scotland, as well as hire more solicitors. Spot advertising followed, conveying credibility, longevity and care for customers. The company was named Scotland’s number one SME in 2015 and continues to work with STV to grow their business.

Richardson’s Garden Centre

Stoats Alexander Daniels

Digby Brown Solicitors

This family run business in the North East has used Sky’s new advertising technology to move into more targeted television advertising - despite having a small budget. Working with a local production company, Richardson’s has produced a campaign at a cost of less than £10,000 and delivered a 17% increase in Christmas sales.

Tony Stone & Bob Arnott set up Stoats in 2005 to take ‘porridge to the people’ – and the world’s first mobile porridge bar soon developed new products, using premium Scottish oats and 100% natural ingredients. Growth has been powered by the company’s brand, especially through social media and its marketing has had to be smart. A partnership with World Porridge Day achieved 5 million impressions in just 24 hours, while an outdoor advertising campaign in Bournemouth increased sales by 18% in the region. With over 10% of sales now from exports and new premises opening in July, Stoats is on track to reach £10 million turnover by 2020.

Alexander Daniels was founded in 2010 and has grown into an established recruitment business, based in Birmingham. Through an advertising partnership with Birmingham Post, the company has seen website visits boosted by 16%, new growth from existing clients and an improved ability to attract recruitment professional to their growing team.

While some SMEs have taken that first step and benefitted, many have not. At present only around 30% of all UK SMEs advertise. SMEs represent 99% of all UK companies, 50% of all UK jobs, and 40% of UK turnover, but only 18% of total ad spending. Research has identified two main reasons. The first is financial. SMEs face particularly strong constraints on short term cash management which limit their ability to invest up front in advertising. The second is knowledge. SMEs that have never advertised before often do not know where to begin and do not have the skills in-house to manage investment. They can perceive advertising as too expensive, too complex, or too intangible. Even those who do begin to advertise focus on individual adverts, instead of planned campaigns, which reduces efficiency and effectiveness. They may create and place an ad, but will often fail to measure, analyse and improve. Technology means there has never been an easier time for SMEs to start advertising, but they are not aware of the tools available or the support (from Government and industry) to help them take the first step. For more information, please see the dedicated report Advertising Pays 2: How Advertising can unlock UK growth potential .

Why is there a market failure?


http://www.adassoc.org.uk/publications/advertising-pays-2-how-advertising-can-unlock-uk-growth-potential/

http://www.adassoc.org.uk/publications/advertising-pays-2-how-advertising-can-unlock-uk-growth-potential/

15

SMEs are cash conscious and need to see immediate returns to their decisions

Tax breaks for marketing [would help]

Advertising Executive, London

Professional Services business, Scotland

What can we do to unlock SMEs’ potential?

The industry wants to partner with the Government as part of the UK’s modern industrial strategy to unlock SME growth potential. It proposes three main measures:

Industry-funded knowledge hubs for SMEs (i) Industry could create in the nations and regions of the UK 3-7 ‘one stop shops’ for SMEs looking to invest in advertising1. These hubs would provide information on marketing tools and associated costs, best practice on design and implementation (e.g. contracts, ROI measurement) and provide an exchange for SMEs to search for service providers. Local media and advertising services companies based in the regions will play a central role, building on the deep connections they have in servicing their communities. Industry would work with the Government to select the regions to be targeted. Hubs could be built in coordination with the Federation of Small Businesses, Chambers of Commerce, and Local Enterprise Partnerships as part of wider SME and local industry development efforts.

(ii) In addition, one national-level hub could support companies looking to export, by giving similar information and assistance for SMEs targeting the top 5-10 export markets identified by DIT. At present, only 19% of UK SMEs export versus the EU average of 25%. Given the challenge of Brexit, it is more important than ever to support UK businesses in their effort to find new markets and new customers.

(iii) The use of these hubs would be monitored and an annual report providedto Government identifying overall activity and specific examples of success.

1 Locations to be considered include for example key cities in Scotland (e.g. Edinburgh, Glasgow, Dundee), Northern Ireland (e.g. Belfast), North England (e.g. Leeds, Manchester, Newcastle), Mid-West England/Wales (e.g. Birmingham, Nottingham, Bristol, Cardiff), and South East England (e.g. London).


16

An industry-led programme to incentivise SMEs that have not advertised before to do so (i) Discounts are often available to first time advertisers, but these are providerspecific, varied in scope and often not publicised. To provide support for firsttime advertisers, we will explore how to encourage the largest number of mediaand advertising service providers to be SME friendly (e.g. provide SME specificincentives). The size of incentives, scope of services covered and applicationof them is open to discussion with BEIS and DCMS2. Such incentives could bemeasured annually and the data provided to Government in an aggregated formfor evaluation.

(ii) To raise awareness, industry activities could be developed in cooperation withthe Government (but funded and implemented by industry) to promote the benefitsto SMEs of advertising, the incentives currently offered, and the points of contactfor support (i.e. regional hub contact points). These activities would target SMEsin specific regions and at the national level. Industry could look at how to use itssophisticated targeting ability to connect with those small businesses that can mostbenefit. Metrics on the impact of these activities would be provided to Governmentfor evaluation.

Tax relief for SMEs investing in advertising (i) While industry can remove barriers to entry for SMEs, a fiscal incentive for SMEs to increase investment in advertising, marketing and promotional services is also needed from Government. As has been seen with the R&D Tax credit, a significant shift in business activity (particularly by SMEs who are often overburdened by day to day operations) requires Government action.

(ii) Using a model based on five years of research, this kind of SME market growth credit measure has been shown to be revenue positive for Her Majesty’s Treasury (HMT) in the short to medium term (5-7 years), after which it becomes very positive due to the cumulative effects on general GDP growth. It is a highly targeted measure, more efficient and cost effective than general corporation tax or national insurance reductions.

(iii) To maximise benefit to the economy and Government revenue, we would plan to investigate the various options with BEIS, DCMS, HMT and HMRC through econometic modelling in order to decide on detailed eligibility criteria.

(iv) The R&D tax relief system has been used as a reference in the development of this proposal. Alternative relief methods could also be considered. The industry is open for dialogue with Government on a preferred system.

2 A final industry wide scheme will be developed taking into account the requirements of competition law.


17

(v) Below is an illustration, for an SME with £100 K of normal taxable profit, and a relief rate of 100%:

Due to the existing deductibility of AMP investments as costs, the total benefit the company enjoys is 200% of the AMP investment, which is significant enough an incentive to drive a change in SME business practices at a scale meaningful for the general economy.

(vi) To give a sense of the potential impact to the economy and Governmentrevenue, a basic scenario has been run using existing models. The scenario hasbeen run using the BEIS definition of SMEs (<250 FTEs). It should be noted theseare initial, conservative estimates (e.g. taking a 1 to 3 multiplier factor, instead ofthe 1 to 6 multiplier) using a model based on 2014 data and current World BankGDP to tax receipt assumptions. A new model is currently being developed onwhich the industry would be happy to engage with BEIS and HMT.

£10,000 £10,000 £100,000 £90,000

AMPINVESTMENT

TAX RELIEF (100%)

NORMAL TAXABLE PROFIT

ADJUSTED TAXABLE PROFIT

Targeting SMEs <250 FTEs

Relief rate SME AMP Investment Increase

HMT Net Tax Impact

(Year 1)

HMT Net Tax Impact

(Year 5)

HMT Net Tax Impact (Year 10)

50%to

100%

16%to

21%

-£122 Mto

-£412 M

Revenue neutral

£700 Mto

£778 M


18

The rates and thresholds for eligibility are open for discussion, as is a potential cap on total annual investment eligible for tax relief. We would now plan to do a detailed modelling effort to investigate various structures, rates and eligibility criteria. We would see various possible options on the criteria for investment to be eligible for relief and the definition of the size and type of SMEs to be eligible for relief. It could also be envisaged that the scheme is focused to support SMEs in specific sectors or regions, or SMEs undertaking marketing related to specific activities (such as advertising related to exports). We recognise that the final case for any fiscal stimulus would have to be robust, and a clear positive benefit for both the wider economy and Government tax receipts would be essential.

While we anticipate it to be a recognised form of State Aid, it is seen as acceptable under existing EU and WTO rules. SMEs are to remain the target and therefore a relief for large companies is not requested or envisaged.

This can be a key lever for the UK’s industrial strategy, targeted to support the kind of businesses which the UK wants to see thrive and removing barriers restricting SMEs from advertising. Our industry wants to explore piloting industry-funded hubs, enhancing incentive systems and developing awareness activities. For Government to implement fiscal incentivies, we recognise that a robust economic case in terms of growth and jobs will need to be made, and are ready to develop further the ongoing modelling work. In addition, industry is ready to undertake other research to collect more data from SMEs and AMP service providers. We would be willing to test these measures in pilot programmes, perhaps targeting regions where SME performance has been under the national average. Suggestions for specific next steps are summarised in the conclusion to this submission.

How to make it a reality?


19

The UK’s advertising industry is a world leader, delivering an export value second only to the United States in size. London is clearly the leading advertising hub in Europe and vies with New York as the pre-eminent global centre of excellence. However, Brexit provides an opportunity for competitors such as Amsterdam, Berlin, New York and some Asian hubs to try to attract business from the UK. They are investing in communication campaigns, direct engagement, incentive schemes and fast, efficient support (e.g. on visas, licences, etc) to attract corporates and individuals. The UK will need to take similar action to maintain its position as the “go to” market for companies to place their global advertising accounts, and the “go to” place for talented people in the advertising and media sector to work.

The UK’s £4.3 billion in advertising exports in 2015 is impressive, but it is the growth of over 10% a year (more than double the rate of service industry exports) which demonstrates the opportunity the sector presents. Global ad spending is over $500 billion. While the majority of this spending is directed to supporting media, culture, sport and digital services in countries around the world, a significant percentage is available as management, creative, market research and digital services fees. The UK therefore has great potential to continue to expand its exports of advertising related services. To give a sense of scale, it is useful to know that advertising yields more export value than insurance or construction services, and more than twice as much as either accounting and auditing or recruitment. For more information please see the dedicated report Advertising Pays 4: Export value and global impact.

3 Sector Deal: Secure and extend the UK’s leadership as a centre of excellence for advertising services

How big is the global market?


http://www.adassoc.org.uk/wp-content/uploads/2016/03/AdAssoc_AdvertisingPays4_REFERENCE_SPREADS.pdf

http://www.adassoc.org.uk/wp-content/uploads/2016/03/AdAssoc_AdvertisingPays4_REFERENCE_SPREADS.pdf

20

Increasesinward

investment

best talent

billionself-

regulation

Creative leadership

internationalsuccess

social change

£1.6 billion

Tom Knox

Sir Martin Sorrell

£4.3world

£300 milliongenerated

by the top 20 UK ad agencies alone from overseas business

“The number one reasonclients give for

choosing a London agency is that this city is a magnet

for global talent”

Chairman of MullenLoweLondon

The UK continues to enjoy a reputationof quality, creativity and innovation inwhat is today a globalised industry”

Annual UK exports ofadvertising services worth

Fostering globalstandards of

Boosts the

of UK brands

The UK has won more Cannes Lions than any other

European country

the UK’s balance of paymentssurplus for advertising is

Europe’s biggest

UK ads have inspired

worldwide

from around the

UK advertising attracts the

£

exportre

turn

Export value and global impact of UK advertising

What do we need to do to secure continued EU leadership?

What can we do to grow the UK as a global hub?

The key challenges are primarily (i) attracting and retaining the best EU and international talent, (ii) keeping market access for related services (e.g. broadcast provision) and (iii) minimising regulatory divergence (e.g. on data sharing). These issues we understand will be dealt with as part of the Brexit negotiations. The focus under the industrial strategy must be to promote the UK’s competitiveness.

We want to build on the UK’s strengths, using the industry’s skills in communication combined with the Government’s strong commitment to the future trade agenda to drive growth and provide high value jobs in the UK.


21

We would propose a package of three measures:

Be the best in communicating the UK’s assets The UK already has a great reputation for providing advertising related services. Government already runs direct campaigns promoting the UK and arranges visits to third markets to promote trade in advertising services. The industry similarly targets large brands in third markets but we want to take this further. We want to be the best. That means being more coordinated between industry and Government and more targeted. Specifically we would propose to:

(i) Create an advertising hub linked to the Department of International Trade website, including a multilingual website, resources and FAQs and potentially dedicated personnel to woo custom to London (similar to the Singaporean model of an economic development board to encourage inward investment). We need to highlight the advantages of using the UK as an advertising huband list in one place the different services / case studies / endorsementsfrom foreign multinational companies.

(ii) Run an ad campaign in third markets building on the ‘Britain isGREAT’ campaign with a specific ‘Britain is GREAT at advertising’ component.

(iii) Work with the Department for International Trade on the top 5 target markets (e.g. China and India), using embassies and networking opportunities to showcase British advertising expertise (like the advertising and market sector visit DIT hosted in Dubai in March 2017).

Boosting UK skills and attracting global talent We must continue to ensure London offers the best mix of creative, digital and analytical talent. This means developing local talent with the right education and technical skills to deliver the best work. It also means the UK remaining the place where the best global talent wants to work- a pre-requisite if we are to remain a global hub for advertising services. Advertising requires an ability to connect with clients and consumers. Chinese, Indian, Korean or Brazilian brands will choose to create their advertising in London because it offers a pool of talent which understands them and their markets on a fundamental level. An approach is needed which both boosts UK skills whilst attracting global talent. Specifically we would propose:

(i) A coordinated advertising skills scheme to deliver the right education and technical skills. The industry would work with Government to identify and communicate to students the opportunities in the sector and the skills needed to succeed. The industry would also invest in apprenticeships, to ensure UK talent is supported by on-the-job training. This may require more flexibility in the current apprenticeship levy scheme.


22

(ii) A flexible immigration system for the Creative Industries, and the advertising services sector particularly. The industry will undertake a large scale research project on skills in the UK and in competing hubs in the EU and internationally to identify the workforce flows. Industry would propose to work with the Government to help identify the level, qualifications and other relevant criteria needed to create a system to encourage the right talent to come to the UK.

(iii) In addition, to support general business activity, a flexible arrangement to ensure minimal barriers for fly-in-fly out business visitors would be important (again to maintain a competitive profile versus other hubs such as Singapore, Amsterdam, New York, etc).

Leverage the UK’s trade agenda One key benefit of the UK leaving the EU is its ability to forge new trade deals with third countries. The UK has helped to define EU and global legislation around marketing, setting legislative precedents on protecting consumers and developing the most robust self- and co-regulatory systems to enforce the rules. As media consumption has changed, notably the shift to digital channels, the UK has continued to lead on issues of identification and placement as well as new ones associated with data privacy, ad misplacement and ad fraud. Setting the regulatory frameworks at EU and global level gives UK advertising services firms, and the wider business community, clear benefits when using advertising to attract customers in third markets. The UK can use future trade agreements (with the EU and third markets) to further reinforce this harmonisation of regulatory practice and minimise barriers for UK business. Specifically, we would propose:

(i) When the Government does trade agreements with other countries, it includesan ‘Advertising Services Annex’ (e.g. covering country of origin, ensuring nobarriers to providing cross-border advertising services, provisions to cover sharingof data, etc).

(ii) Use UK bilateral trade dialogues to encourage replication of key UK regulatorystructures governing advertising (legislative and self-regulatory) in third markets.This will help to reinforce the UK as a centre of best practice, and reduce barriers forUK companies when undertaking advertising campaigns. Markets still developingregulatory structures (for example in Asia and Africa) would be primary targets.


23

The Advertising Association has been working to secure broad based support for these proposals over recent weeks. Key businesses within the advertising sector are strongly supportive, as are those from the wider creative industries and business community.

To support BEIS, DCMS, DIT and HMT analysis of these proposals, the industry is preparing two major research efforts. The first focuses on econometric modelling to determine the optimum level of support for SMEs from industry (in terms of incentives and support) and from Government (in terms of tax relief for investment in AMP services). Deloitte has been retained to develop a new model on which the Government and industry can run various scenarios. The aim is to ensure full data sets are ready for the June – July 2017 period to help feed into any UK budgetary discussions for 2017 and 2018.

The second is a research project to determine the flow of people within the advertising sector as they move between companies, regions and even countries. This will help identify skills shortages in the UK, and suggest how to solve them. It will also inform the Government’s plans on the broader talent management challenge. On both of these research programmes the industry would welcome collaboration with the Government.

Brexit uncertainty requires bold action and while the industrial strategy is focused on the long term, it is important in the short term that the Government demonstrates it can and will take strong measures to drive change. However the industry recognises that before a full national roll-out, pilot projects could be run targeting specific regions or third markets. The industry is ready to work with BEIS and regional authorities to determine more detailed roll-out plans in the nations and regions.

The industry has developed these proposals incorporating measurement at every level. Continual data collection on the effectiveness of this scheme (in quantitative and qualitative terms) is planned. The aim is to ensure that BEIS can accurately track the impact of Government and industry efforts over the long term.

We stand ready to further consult with BEIS, DCMS, DIT and HMT on the specific details of the proposal over the next months, with the hope of securing its inclusion in the Industrial Strategy White Paper.

April 2017

4 Conclusion and next steps

How to investigate these proposals further?

How to begin implementing them?

How to evaluate and enhance?


24

The Advertising Association promotes the role, rights and responsibilities of advertising and its impact on individuals, the economy and society. We bring together companies that advertise, their agencies, the media and relevant trade associations representing the common interests of advertising and marketing communications. We develop and communicate industry positions for politicians and opinion-formers, as well as publish industry research through advertising’s think-tank, Credos. This includes the Advertising Pays series which has quantified the advertising industry’s contribution to the economy, culture, jobs and society.

The Advertising Association’s members are drawn from all sides of the advertising and marketing communications industry, further details can be found on the Advertising Association website.

Who we are

Members


*oredo vwuhqjwk dqg uhjlrqdo jurzwk a blueprint for … · government fiscal and industrial...

Documents