1.Advertising is essential for growth and competition in the economy, and for producing jobs. According to the industry’s trade body, it added £120 billion to the UK’s economy in 2016 supporting over 1 million jobs. It is a significant industry in itself: in 2016, £21 billion was spent on advertising, and 198,000 people were directly employed in advertising and marketing services.
2.London competes with New York as a global centre for advertising. UK agencies sell their services to clients around the world. Export of advertising services amounted to £4.3 billion in 2016, making it the UK’s third largest services export. As a result the UK attracts talented workers from around the world which has given the industry a highly international character.
3.Advertising contributes to culture and society. Advertising is a creative endeavour in which the UK is especially successful: UK agencies have won more Cannes Lions prizes than agencies from any other European country. According to the Government, advertising and marketing services are the second largest of the creative industries in their contribution to the economy. Advertising is also of great importance for the other creative industries as a source of work and funding. For example, it nurtures the talent of content creators such as graphic musicians, film-makers, graphic designers and special effects technicians.
4.Jobs in the creative industries, such as advertising, are likely to become more important in the future. Sir Peter Bazalgette’s Independent Review of the Creative Industries, published in September 2017, argued that these jobs “are highly resistant to automation with 87% of creative workers in the UK at low or no risk, meaning their share of the workforce is likely to rise steadily in coming years”.
5.Advertisements have long funded media, including radio, press and television broadcasting, and now sponsor a vast quantity of content and services available online. Following year-on-year growth, ‘digital advertising’ accounted for over half of all spending on advertising in the UK for the first time in 2017. All sectors of the advertising market have sought to take advantage of this medium including an increasing number of ad tech businesses (see Box 1). However, digital advertising has also disrupted more traditional modes of advertising and exacerbated problems such as fraud.
Advertisers pay for advertising. They include businesses, political or civil society organisations and public bodies.
Advertising practitioners, whose businesses are known as agencies, develop the content of advertisements and arrange for them to be distributed. Agencies are supported by others such as content producers, including film-makers, musicians and artists.
Media owners own space where advertisements are consumed. Media owners, including news media publishers, broadcasters and owners of physical spaces such as billboards and buses, receive money for displaying advertising.
Ad tech businesses mediate the delivery of advertising with digital technology.
Online platforms encompass search engines, video-sharing and social media platforms, which aggregate content for users. Many receive advertising revenue as media owners and by providing ad tech services.
6.The internet has also generated many innovative but complicated business models to make money from the provision of content and services. The details of these business models are not open to external scrutiny and the market has been described as “murky”. As a result, even people within the industry cannot follow new developments. Online advertising often involves the processing of personal data that ‘identifies’ the interests, economic, personal and emotional data of a user. Advertisers compete to buy users’ attention on the basis of whether they resemble the ‘sort of user’ they wish to communicate with. The user is then shown an advertisement that they may or may not engage with. In this model content may be professionally produced (for example, news media), user generated (personal Facebook feed), or from business source (Amazon). In each case, the user is not charged for a service but rather the user exchanges their data for it. There is an aphorism about the internet that: “if the product is free, you are the product”. This is explored more fully in Chapter 2.
7.The UK enjoys high standards of regulation of advertising content through the self-regulation of the Advertising Standards Authority (ASA)—that is, the industry pays for the ASA, an independent body, to create and enforce rules without requiring legislation or courts. The ASA’s mission is to ensure that advertising is “legal, decent, honest and truthful”. As a result, consumers have historically had a high degree of trust in UK advertising and we believe that “legal, decent, honest and truthful” should remain the values of advertising.
8.The abundance of unpaid-for content available on the internet has fragmented audiences and enabled digital advertising to target individual users rather than being connected to specific content. This has had a profound effect on the production of high-quality content, especially news media. Online advertising avoids the standards that other advertising generally adheres to. Users feel bombarded by low quality advertising such as ‘clickbait’. All of this threatens to undermine the quality of user experience and trust. Without trust advertising is not effective, thus the industry itself is at risk.
9.At the outset of our inquiry we noted that leaving the EU could limit the UK’s international success as posing a risk to the advertising industry. We set out to investigate how the Government can support the sector, which has clear economic and cultural benefits to the UK. As we proceeded with our investigation, we found it necessary to consider in detail the seismic changes to advertising brought about by digital technologies.
10.In this report we first address the impact of digital advertising. We then consider the workforce and skills needed for the advertising industry to thrive. Finally, we consider the international nature of the industry and its use of international workers. A number of areas explored in this report illustrate issues that affect the wider creative industries sector.
11.During our inquiry we heard evidence from representatives of businesses and industry bodies, regulators, universities, and ministers. We also visited Manchester Metropolitan University where we met academics, students and businesses. We are grateful to all those who contributed to our inquiry. We are grateful to our specialist adviser Professor Agnes Nairn, Chair of Marketing at the University of Bristol, for her expert advice.
1 Written evidence from the Advertising Association ()
2 Written evidence from HM Government ()
3 Written evidence from the Advertising Association ()
4 The Cannes Lions International Festival awards prizes for creativity in advertising.
5 Sir Peter Bazalgette, The Independent Review of the Creative Industries (September 2017): [accessed 3 April 2018]
6 In this report we use the term ‘digital advertising’ reflecting the practice of many of our witnesses. Others use ‘online’ or ‘internet’ advertising to mean the same thing.
7 (James Murphy)
8 Written evidence from Guardian News & Media ()
9 See Appendix 3 for our Call for Evidence.