12 June 2015

What contribution does advertising make to the economy in NI?

Robert Lyle, Media Director at LyleBailie International, looks (with Ulster Business) at the importance of the local advertising world.

The following analysis is reproduced with kind permission from Ulster Business, the full article appeared in the May 2015 edition of the magazine and is available to read on the link below.

LyleBailie estimates the Northern Ireland advertising media market was worth £155.7m in 2014.

Not an unimpressive figure and one which helps to keep a lot of people in employment and up from the £141m figure in 2012.

However, as before, Northern Ireland punches well below its weight in terms of media spend per capita. UK expenditure is around £232 per person, and the Republic of Ireland £120. In NI the spend stands at £86. Indeed on a pro rata basis the NI market should be worth £402m in spend.

No other issue is more important to the future of the industry in NI. Were we to increase our share of spend by just 0.2%, this would bring an additional £30M into the NI economy helping to employ more journalists, media sales and marketing people and help our transport and Outdoor infrastructure too.

How can citizens be sure of a robust, independent media sector to keep Government accountable without a fair distribution of revenue throughout the UK and Ireland? We can’t depend on Facebook and Twitter to do that.

When we look at the allocation of media spend we can see structural issues come into play.

Comparing share of spend in 2000 to 2014 we can see that Press has declined from around 47% share to 33%. TV is also at 33% with Outdoor 10%, Radio 9% and Cinema at 1%. Digital is growing fastest with an estimated 14% share – significantly below the 50% it takes in the UK and 30% in the Republic of Ireland. It has now taken a significant part of the classified spend from press and continues to grow we estimate by around 9 -10% year on year.

Why there is such an under investment in our advertising industry?

Part of the reason may be that some of the media planning systems for NI are different – for example Outdoor and Press.

Many campaigns planned in Great Britain and Dublin leave NI off the schedule or limit the amount apportioned here.

Certainly the local industry is too dependent on NI Government advertising spend – and so when the Executive looks for savings then advertising is often the first to suffer, despite the evidential role it has had in saving lives and delivering Value for Money to the taxpayer.

A large number of client decisions are now made outside NI for certain sectors such as Banking, Travel and FMCG brands.  If Governmental decision making has devolved, why has budget setting by major organisations based here moved in the reverse direction?

Foreign Direct Investment is not bringing any significant additional spend into our local media sector so far.

The TV production sector has been very successful in campaigning for 3% share of network commissions for Northern Ireland (principally with the BBC). Our industry must start to campaign for a similar 3% allocation from major UK companies to be spent in NI and if the campaign is planned on an all-Ireland basis the allocation should be 28% for NI. The evidence shows that local agencies (and media) will make this budget work harder in the local market, using more local media channels, better.

At a population of 2 million, the local market is small and it would be great to see more of our local companies developing brands here and outside NI – the local media and agency sector certainly has the expertise to help them build brands rather than just trade in commodity products with large GB multiples or other global organisations.

Building brands is the way to grow the NI economy. It requires investment.

And since advertising prices in Northern Ireland are lower than in Great Britain and the Republic it makes our market a great place to invest in new brands and test-market new products before moving to export.

Overall the Northern Ireland media, advertising and marketing sector has to up its game. An industry-wide initiative to address these problems is crucial, or else there will be very little left of the Northern Ireland media industry in a decade, with drastic consequences for jobs, the economy and democracy.