Deloitte report shows advertising contributes $6 billion to New Zealand economy

The Commercial Communications Council (CCC) this week released a report showing that the advertising industry contributes $6 billion to the New Zealand economy.

This accounts for 2.4 percent of the nation’s total GDP and is equivalent to about half the contribution made by the international tourism industry annually.

The Deloitte report found that paid advertising expenditure accounted for $2.4 billion in 2015, a number that expanded to $3 billion when content production revenue was also included.

Advertising contributes to the economy through a range of sectors, including retail ($816 million), leisure and entertainment ($588 million), food ($566 million), automotive ($526 million) and government departments, services and community ($383 million).

The report also shows the impact of advertising as a job creator, with 44,000 people employed in the industry and in associated categories.

Beyond the broader economic figures, the report also highlights the impact of advertising on businesses.       

According to Deloitte Access Economics’ partner and report co-author John O’Mahony, the report provides a strong argument for investment in advertising.  

“The report finds that award-winning advertisements in New Zealand have delivered $17 in sales for every $1 spent on the campaign,” says O’Mahony.

“Beyond the direct benefits to business, advertising also delivers a broader economic benefit, because it fuels competition, which drives innovation, quality service and lower prices for consumers.”

In addition to this, advertising also plays a cost-saving role in the industry through public health and government work.  

As an example, the report highlights that the ‘Legend’ drink driving campaign, commissioned by The NZ Transport Agency, is estimated to have saved 64 young driver lives over three years, saving the country $290 million (the Ministry of Transport estimates that the cost of a single life in a drink driving crash is $4.54 million).

CCC chief executive Paul Head says these results are particularly compelling because they come from an independent source rather than from the industry itself. 

Commenting on the motivations behind the report, Head says the CCC board wanted to provide a broad view of the contribution advertising makes to the industry.

“While the industry has lots of case studies about the effectiveness of individual advertising campaigns, this is the first time we have been able to quantify the importance of the advertising industry to the New Zealand economy at a macroeconomic level,” he says.

A similar report was released in the United Kingdom two years ago, and Head says he’s wanted to do something similar in the local market ever since.

“It confirms what we already know intuitively: that marketing drives economic growth,” he says. 

Head says the report gives marketers and advertisers the statistics to back what they’ve been trying to explain. At a time when marketing conversations are increasingly driven by ROI, efficiency and effectiveness, the CCC hopes this will provide some evidence of the effectiveness and importance of advertising.

The report is freely available for anyone to download

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