by: Scott Goodson

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New study shows importance of advertising to economic growth

A new study commissioned by the World Federation of Advertisers and the French Advertisers Association (UDA) has given one of the most comprehensive insights yet into the importance of advertising to economic growth.

The study will be officially presented tonight in the European Parliament at the launch of a new platform to promote debate on the role and value of advertising to European society and its consumers. Entitled "AdVantage", the initiative is supported by Members of the European Parliament (MEPs) of different parties and nationalities as well as the European advertising industry.

The doctorate thesis carried out at the University of Paris IX Dauphine compares a number of markets to demonstrate that there is direct correlation between advertising expenditure and economic growth. It shows how a higher rate of advertising investment as a percentage of GDP directly increases the rate of return on other tangible and intangible investments, such as R&D, product development and skills training.

Jean-Hervé Lorenzi, Economics Professor at Paris IX Daupine and President of the French Cercle des Economistes, who was the thesis director, commented: "An economy that makes full use of advertising maximises its capacity for production. It makes its material investments more profitable."

The study demonstrates the impact of advertising on innovation and how it is essential for competition. Advertising speeds up the conversion of R&D expenditure into revenue. It helps transform technological progress, often in danger of being unexploited, into profitable product innovation. The best levels of economic performance are shown to be generated where investment in innovation is effectively combined with investment in advertising. Business sectors where advertising is used effectively are those with the most dynamic market share movement and therefore those in which competition, a recognised driver of growth, is liveliest.

"This study is critical to helping us better understand how advertising helps maximise competition and innovation," said Stephan Loerke, Managing Director of the World Federation of Advertisers. "With increasing pressure to restrict marketing communications in some areas, we need a more balanced discussion bearing in mind the benefits that advertising brings."

The AdVantage platform, the initiative of a number of Members of the European Parliament, will seek to provide such a discussion forum. "AdVantage represents our interest in a real debate about the role and responsibilities of advertising in the EU, particularly in the context of Brussels legislation," said Holger Krahmer MEP, a German Liberal Democrat and one of the hosts of today's launch of AdVantage.

The full study can be downloaded here

To attend the launch of the AdVantage platform at 7pm in the members' salon of the European Parliament (more details at http://www.advantageplatform.eu/), please email Maryke Lefebvre at: maryke.lefebvre@eaca.be

The World Federation of Advertisers (WFA) is the voice of advertisers worldwide representing 90% of global marketing communications expenditures, roughly US$700 billion per annum, through a unique, global network: 55 national advertiser associations on five continents as well as direct multi-national corporate members. Through the network, WFA represents more than 10,000 businesses operating in a broad spectrum of sectors at national, regional and global levels. WFA has a dual mission: to champion responsible commercial communications and to facilitate a media environment, which stimulates maximum effectiveness of ad spend. More at www.wfanet.org

AdVantage is a platform to facilitate debate about the role and responsibilities of advertising in our society and its relation to EU policy-making. This non-partisan European initiative aims to encourage discussion on advertising-related issues in the European Parliament by bringing together political decision-makers and expertise from representatives of the advertising and media industries. More information can be found here.

Original Post: http://scottgoodson.typepad.com/my_weblog/2007/10/new-study-shows.html

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