The Economic Benefits of Marketing
A new report, Marketing Multiplied, cites empirical evidence that marketing communications positively impacts on the economy. What’s more, the report provides evidence of both macro and micro economic benefits.
The authors of the report are:
- Chris Johns, a former economic advisor in HM Treasury;
- Jim Power, former Chief Economist at Friends First Group And Bank of Ireland and
- Alan Cox, CEO of Core Media, Ireland’s largest marketing communications group.
“the evidence is clear about the influence of advertising on economic growth: it is positive and large. The debate is mostly about the size of that effect.”
They cite research that suggests that for every €1 of advertising spend €5.70 is generated within the Irish economy.
The report concludes that marketing communications has a central role to play in a market economy. It informs consumers; increases consumer choice and welfare and develops markets. It enables producers to increase sales while at the same time increasing competition to restrain prices. Increased economic activity also leads to increased employment and opportunity.
Advertising and Economic Growth
The report explores and confirms a strong link between advertising and economic growth.
“Advertising is extremely important for the overall level of economic activity; it oils the wheels of economies, provides jobs and boosts growth in an unambiguously positive way.”
The Irish findings are supported by research from around the globe often citing similar findings though often with larger impact. Economists have paid much more attention to advertising’s relationship with competition, innovation and prices. Again, the evidence points to robust conclusions: advertising promotes competition, boosts innovation and helps to lower prices.
Marketing – Impact on Business
Creative advertising and marketing campaigns can have a significant influence on the growth and profitability of individual businesses. The decisions and level of investment made in creativity therefore, will impact directly on the growth and the profitability of the brand.
Creatively-awarded campaigns are 6 times more efficient in growing market share than non-awarded campaigns. Recruiting new customers is more profitable than trying to increase frequency of purchase. It truly does pay to be creative.
The size of a brand has a major impact on the efficiency and effectiveness of marketing communications. Large brands have inherent advantages over smaller brands; they have higher penetration, better distribution, stronger range and pricing strategies that help to maintain and increase share. Short-term marketing is on the rise and it is damaging the profitability of marketing.
Campaigns sustained over the longer term are, on average, 3 times more efficient than shorter term campaigns.
Short-term initiatives are more effective at driving transient sales effects They are weak at delivering long-term growth. Business needs to employ both strategic and tactical techniques but favouring the longer term.
Campaigns Need Emotion
Emotionally-based campaigns outperform rationally-based campaigns on every business measure. They are:
- more profitable
- better at raising awareness
- stronger at creating differentiation and
- build consumer brand loyalty
On average, marketers should spend 60% of their budget on brand-building activity (long-term, broad reach, emotional) and 40% on sales activation (short-term, tightly targeted and information rich), to achieve maximum efficiency and maximum effectiveness. Brands that use paid media, normally grow up to 3 times faster than those that simply rely on PR and sales promotion.
Who Should Read Report?
Marketing Multiplied is packed full of case studies, facts and figures, that confirm that marketing is central to economic growth both at business and national level. At 130 pages it is an essential read for marketing professionals, academics, economists, politicians and insomniacs.