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Advertising Investment Crucial for Recovery

Getting brands to invest in advertising will play a significant role in any economic recovery that takes place according to a new “advertising expenditure barometer” which has been published by the Association of Advertisers in Ireland (AAI).

The barometer measures advertising expenditure trends against Irish GDP and business confidence as well as the wider impact of advertising on the wider economy and was written and compiled by leading economist Jim Power. According to Power, “the advertising expenditure barometer is showing tentative signs of stabilisation and recovery, but a recovery in expenditure will lag economic recovery – or so history suggests. Getting advertising expenditure growing will be a driver of and an indicator of economic recovery. Trends in business confidence, consumer confidence, consumer expenditure and employment levels in the economy will be interesting to observe over the coming year, and the manner in which business responds to those trends in terms of advertising expenditure.”

Power adds that, “experience elsewhere shows that those companies who respond most quickly through ramping up advertising expenditure will gain a lead on competitors and will play a more meaningful role in driving economic recovery. The growing trend towards restricting advertising is an issue of serious concern for the advertising industry and Irish media in general. It is estimated by the AAI that close to 75 per cent of turnover for media organisations is derived from advertising. Advertising revenue directly supports employment in various media organisations, which is estimated at 10,000 people in the press, radio and TV. A restriction on various forms of advertising would put serious financial pressures on media organisations, but would also causing serious funding difficulties for activities such as sport, which in turn has implications for health and ultimately health expenditure.”

The Association of Advertisers in Ireland (AAI) is the only association focused single-mindedly on the interests of Irish advertisers.Its aims and objectives are quite clear: to promote and defend the reasonable freedom to advertise.

According to Barry Dooley, the CEO of the AAI, “the new barometer is the first in what we hope will be an on-going benchmarking exercise on behalf of the advertising and marketing industry. I believe the industry needs this crucial information in order to monitor advertising expenditure trends against GDP and business confidence. This barometer should also serve to be a “wake up” call to those people out there who seem to “point the finger at advertising” and blame our industry for many social problems out there which is simply not fair.”

“The commentary within this survey is not very positive and hopefully the news will be better in the next barometer.  During periods of economic difficulty, there is a strong temptation to cut the marketing/advertising budget and that has clearly happened over the past 5 years. While cutting marketing budgets may generate short-term savings on the bottom line, businesses should be aware of the possible long-term damage that cutting expenditure on advertising will have. Damage could be done to the brand that might never or take a long time to recover. At a more general level, a properly functioning and vibrant economy requires a vibrant advertising industry. Precedent suggests that those companies who continue to invest in the brand during recessionary times, are the ones that will gain the upper hand on competitors and exploit economic recovery when it happens. Experience elsewhere suggests that those companies who respond most quickly through ramping up advertising expenditure will gain a lead on competitors and will play a more meaningful role in driving economic recovery,” says Dooley.

A full copy of the AII Advertising Barometer can be downloaded HERE

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