Wednesday 22 August 2018 12:12 pm

Adland is failing to help startups and SMEs grow

Much has been made over the last few months of the struggles of the network agency groups, Sir Martin Sorrell’s departure from WPP, and his subsequent immediate launch of S4C.

But amid these turbulent times the advertising and media industry continues to miss a significant trick.

It’s obsessed with big – winning big brands, big businesses, and big advertising budgets. It’s no surprise that 70 per cent of our market is dominated by the massive agency networks.

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Yet the economy is witnessing a new generation of disruptors, an anti-corporate movement that’s reshaping just about every product sector. These businesses and ideas start small, but represent a huge part of our economy: SMEs account for 51 per cent of the UK’s private sector turnover. It’s from these organisations that the next big things will most likely come, and not the monolith corporate organisations dominating the advertising market.

People will always question the validity of advertising’s contribution to business growth, understandably. But we have a good case to make. Advertising Association data shows that while 43 per cent of SMEs advertise in some way, they only account for 18 per cent of spend. Yet each £1 spent on advertising delivers an average £6 increase in GDP, and £3 increase in profitability. And for SMEs that £1 can benefit the business eight times as much as a larger organisation.

Our own experience supports this. In the 18 months since Bountiful Cow’s inception, we’ve seen advertising directly contribute to double-digit growth for nearly every client – including a turnaround in the Movember Foundation’s charity donations, and huge sales growth for quality pet food brand Lily’s Kitchen. Both businesses were new to mainstream paid advertising.

However, the sad truth is that because the networks are under such pressure to win big in the short-term, they are not geared up or suited to invest their time, effort or best talent in challenger brands. Amid declining share prices, shareholders expect near-term returns.

Bountiful Cow accounts for a small fraction of the media market, but the underserved SME sector has huge potential, and the independent agency sector is well-placed to unlock it and accelerate the growth of the UK’s best challenger brands.

Businesses like ourselves are the masters of our own destiny, and can take a longer-term calculated risk with emerging opportunities. What’s more, we are like-minded businesses who acutely understand the pressure of running our own business, and act as true growth partners.

And as the Advertising Association research shows, that growth can be significantly expedited by investment in advertising.

If the association’s figures are anything to go by, stimulating the SME sector to invest in advertising relative to its market share could generate a further £36bn of GDP and £18bn of additional profit to the SME sector overall.

That’s a very big trick to miss.

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