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Health of UK’s culture, media and sport revealed to be dependent on advertising revenues

New research by Deloitte has revealed that without advertising, much of the UK’s media, culture and sport would be unsustainable in its current form.

The report – Advertising Pays 3 – examines how advertising spend and brand sponsorship impacts the media, entertainment, arts and sport that people enjoy every day.

Deloitte’s analysis shows that people value access to these advertising-funded services at nearly £10 billion – a figure that strongly suggests we are not able (or willing when set against other priorities) to meet the full cost of providing them. By lowering the cost of media and culture, advertising brings it within reach of millions more people than would otherwise be the case.

The Deloitte report estimates that advertising accounts for around half of the newspaper industry’s revenues, so it could be argued prices would have to be twice as high in the absence of advertising. Based on Deloitte’s estimates of how consumers would react to a price increase, we estimate newspaper sales could fall from 91 million to as little as 20 million each week. In consumer magazines, the absence of advertising would lead to some 378 million fewer magazine sales each year and Deloitte argues that it is hard to see how the commercial radio sector could survive in its current form.

The Advertising Association estimates that the gap between what people are willing to pay and the true cost of the advertising-funded media they receive is almost £5 billion1, equal to £187 per household per year.2 Household spend on recreation and culture3 is already the third highest weekly outgoing – ahead of spend on food and non-alcohol drinks, household goods and services and clothing and footwear.

Download the full report here.

Source: http://isba.org.uk/news/2015/01/28/health-of-uk-s-culture-media-and-sport-revealed-to-be-dependent-on-advertising-revenues