Government says ad industry must modernise itself to grow

- The Government has told the advertising industry it must modernise itself in order to enjoy continuing growth.

- The Government has told the advertising industry it must modernise itself in order to enjoy continuing growth.

The Blairite message came from a task force on the creative industries chaired by the culture secretary Chris Smith, which includes Eric Salama, a main board director at WPP.

Its report says the ad industry knows its future lies in its own hands, adding that "it must modernise and encourage the development of new talent."

Key issues confronting advertising include agency structures that have changed little in the last 50 years; too few talented people being attracted to the industry and "negative perceptions" of it among clients and prospective employees.

The task force says the industry must focus on its clients' needs and meet the challenges of the global market, as well as competition from new design and strategic consultancies.

"The industry's long term position is seen to be strong" says the report. "Growth will be driven by expansion in the UK and world economies and by the growing number of organisations in the public and private sectors which want to differentiate themselves."

It suggests advertising will survive the slowdown in the British economy next year, since "most agencies seek to ensure that margins are protected during economic downturn."

Agencies are diversifying and developing expertise in non-media specific marketing communications. "The burgeoning new media, for example, the internet, digital and satellite TV, as well as increasing numbers of terrestrial TV, commercial radio and magazines and sponsorship opportunities, represent real opportunities for the industry."

Although the task force estimates that Britain's creative industries, which now employ 1.4 million people, could create another 50,000 jobs over the next three years, it gives no specific figure for advertising.

Current employment is estimated at 96,000, of which 63% are women and 19,000 self employed. The contribution of advertising to the national economy is £2.9 billion a year, with net earnings of UK agencies running at about £1 billion.

Although the 47 independently-owned, medium-sized companies are under increasing pressure from the 20 large agencies, the number of small shops is growing across the regions as smaller organisations recognise the importance of advertising to market share.



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