Research from McKinsey & Company shows advertising drives economic growth

Having interviewed several thousand advertising professionals over 10 years as a Recruiter in Asia, I have sometimes come across the odd Advertiser that wonders if what they do, really is that important.  Making an TVC, having a poster put inside a train or creating a fan page on a social network site.  Rest assured advertisers, your efforts are a major contributor to the macroeconomics of the "world".

A new paper by McKinsey & Company demonstrates the role of advertising as an engine of economic growth.

  
The paper looks at the value of advertising in G20 countries (including Australia) from a global macroeconomic. It also takes microeconomic perspective, using Belgium as a case study.

Key findings:
·         Advertising fueled about 15 per cent of growth in GDP for the major G20 countries over the past decade because it generates new business (in some years the contribution was as high as 20 percent).

·         Advertising can contribute to a country's GDP and digital media can boost advertising's typical contribution to performance for both individual companies and the economy as a whole.

·         On a microeconomic level, introducing digital media to the advertising mix helped companies increase their revenues, market share, and profit margins to a degree greater than traditional advertising alone.

-          Digital media provided many benefits for the average company, contributing 16 per cent to profitability, 25 per cent to revenue growth, and 30 per cent to gains in market share.

-          Digital media produced its effect by enhancing the impact of print and broadcast ads, rather than by replacing them.