Report: Advertising adds 27% to U.K. B.O.

British distribs spend $310 mil on advertising

LONDON

U.K. box office take would drop by more than a quarter without advertising, a report conducted by Deloitte for the Advertising Assn. revealed Thursday.

The “Advertising Pays” report estimates that Blighty’s £1,076.6 million ($1,707 million) B.O. revenues in 2010 would have been 27% lower without advertising, equivalent to almost $474 million.

In 2011 U.K. film distribs spent $310 million on media advertising, $39.5 million up on 2010, plus $213 million on prints, DCPs and trailers.

“The U.K.’s creative industries are rightly world renowned, but without advertising many firms in these industries would simply cease to exist,” the report states. “Without advertising, it is likely that this market would look very different. It would be harder for producers to innovate with formats, technologies or new actors.

“The result would be a lower level of production with less risk-taking. This could be expected to have a significant impact on the overall market size, with a knock-on effect on the number and variety of films that could be financed.”

The report shows that $25.4 billion was spent on advertising in Blighty in 2011. It concludes that the aggregate impact amounted to a $158 billion effect on GDP.

Ad spend contributes 29% of U.K. TV revenues, which fund free-to-air and subscription channels, other principal sources being the BBC license fee and commercial subscriptions.

“In turn these broadcasters (alongside the BBC) sustain U.K. industries such as the independent production sector,” per the report. “In 2011 this sector generated $3.8 billion, with nearly $474 million revenues in exports of U.K. program and formats.”

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