Join us for Manchester Institute of Innovation Research Seminar Series 20/21, webinar hosted by Professor Bruce Tether and Gerald Chan, Alliance Manchester Business School.
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How locally embedded are KIBS? A study of non-London advertising agencies and the locations of their leading clients
Peng Khoon Gerald Chan and Bruce S. Tether
Knowledge intensive business services (KIBS) are unequally distributed over space, especially in the UK. And among KIBS, few if any are as unequally distributed as advertising agencies; put simply central London dominates the UK advertising sector. This observation raises questions, such as why? And whether anything might be done about it, particularly in relation to the “levelling up” agenda. One of the possible reasons for the uneven distribution of KIBS is that their locations may reflect the geography of demand. Put simply, KIBS might need to be located in close physical proximity to their clients. In this paper, we first examine the locations of leading non-London advertising agencies and then examine the extent to which their services are traded over distance. We do this by drawing on a novel database, findings from which reveal firstly that many leading ‘regional’ advertising agencies locate in ‘surprising places’, which theory would not predict. Second, by analysing a set of nearly 600 client-agency dyads, we reveal the extent to which advertising services are traded over distance. We find that procurement is mostly not local and, contextualising the procurement behaviour to Central Place Theory, that most does not align to behaviours that that theory would predict. It seems that outside of central-London, the UK market for relatively big-budget advertising is remarkably aspatial, and that the non-central London advertising industry is essentially “footloose”. This essentially suggests there are two geographies in the UK advertising industry: central London and elsewhere. The challenge for “levelling up” policies involving encouraging the growth of high value adding, high wage activities outside of central London is to first understand the unique advantages within the UK that central London provides. Aside from developing this understanding, we also end with a plea for further geographical studies on intra- and inter-national trade in KIBS (or “advanced producer services”).
Bruce Tether is Professor of Innovation Management and Strategy at Alliance Manchester Business School. He is also a member of the Manchester Institute of Innovation Research. He is also the research director of the AHRC funded Policy and Evidence Centre for the Creative Industries. His research currently focuses on three things: the organisation and performance of professional service firms, such as advertising agencies and architecture practices; the role of design in innovation and competitiveness, and regional inequalities in the UK economy, particularly with reference to creative industries and the creative economy.
Gerald Chan is a PhD student at the Alliance Manchester Business School / Manchester Institute of Innovation Research studying the geographical organisation of the UK advertising industry, including the locations of agencies and their clients.
