SME tax breaks and a new plan to drive growth
Siobhan Kenny, CEO at Radiocentre, explains why tax breaks for SME advertising will boost business growth and help fund the media business
You don’t have to tell us radio people that there is a world outside London. The va va voom from across the whole UK has fuelled record radio audiences and ad revenues over the past two years. This explains why I was so keen to lead the major new strategy by the Advertising Association on promoting regional growth in a post-Brexit world.
The Driving Growth initiative, launched at the AA’s LEAD conference, identifies a missed opportunity for the media business and one that, fully recognised, will also boost broader business and the economy. Namely, encouraging SMEs to invest more in advertising.
Research from advertising think tank Credos, also unveiled at LEAD, revealed that SMEs are responsible for 40% of UK turnover but account for just 18% of total ad spend.
It’s clear that this is an opportunity that extends well beyond the capital. There are 5.7m SMEs in the UK, 81% of which are based outside of London (BIS Business Population Estimates, 2017). They form the majority of businesses in the regions and nations, and 99% of all businesses in the UK. They also represent 60% of private sector employment (15.7m people) and 47% of all private sector turnover, with a combined annual turnover of £1.8 trillion.
The Driving Growth initiative aims to encourage a greater commitment to advertising from these SMEs, with a targeted plan to launch new industry knowledge hubs in the nations and regions, offering advice and information about advertising to SMEs. We will be running two pilots in Scotland and West Midlands later this year, and also talking to local authorities, Local Enterprise Partnerships, and other bodies about how they can help drive the initiative.
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And it’s fantastic to have the support of so many people and businesses from the media and advertising industry. To accompany the launch of the new strategy, there’s a new film featuring advertising and media talent from across the UK’s nations and regions.
Part of the AA’s Great Advert for Britain campaign, it shows how cities across the UK are developing their own specialist identities with the result that Britain is a hotbed of creativity. Mayor of the West Midlands, Andy Street, helped to bring this to life at LEAD, stressing that identities were equally important to small business and that the key to marketing success for SMEs is about finding a distinct story to tell.
Beyond this we’re also calling for much-needed support from government. As well as doing more to educate these small businesses on the opportunities that advertising presents, the Government should offer tax breaks to regional businesses to encourage them to run ad campaigns as part of its industrial strategy.
This approach would have a profound impact well beyond the advertising industry, benefitting the nation as a whole. I believe that incentives for SME advertising would give regional businesses a similar boost to that received by the tax breaks that have benefitted the film industry.
Tax relief for the British film sector, introduced in 2007, totals £2.3 billion to date, and reached £415 million in 2016, rising from £339 million the previous year. Films claiming tax credits have included Wonder Woman, T2: Trainspotting, and Star Wars: The Force Awakens, and the scheme has helped to boost the £4.3 billion UK film industry while providing employment for 66,000 people.
Similar tax relief, applied to advertising for SMEs, will deliver mutual benefits, helping secure the future of the commercial media sector by bringing in previously untapped revenue streams. And, because advertising is proven to increase sales, improve brand reputation and create fame among consumers, customers, investors and suppliers, it will prove a powerful tool for SMEs.
According to the Credos research, 56% of all small businesses don’t use marketing or advertising and that has to be a huge wasted opportunity for UK plc. If we can unleash the wave of creativity, we will not only boost growth and productivity but also, just as importantly, build bridges to help Britain coalesce into one space. That has to be a great target for both the media industry and the Government.