Price index for advertising activities

Developing a price index for NACE Rev.2 73.1 Advertising services is part of a broader project in Statistics Norway that focuses on price statistics. The development of a price index for advertising services started in 2008.

We have studied the experiences of other countries that have already established an SPPI for advertising services. Based on these experiences, our meeting and correspondence with the Association for Creative, Commercial Communication and of course our own studies of the market in Norway, we have developed a method.

For this industry we had to develop separate methods for NACE Rev.2 73.110 - Advertising agencies and 73.120 – Media representation. Briefly summarised, this means collecting hourly charge-out rates for NACE Rev.2 73.110 and direct use of prices of repeated services for NACE Rev.2 73.120. Both of these methods are characterised as B methods, and are therefore approved and acceptable methods (OECD-Eurostat 2005 Methodological Guide for Developing Producer Price Indices for Services). The Methodological Guide classifies A methods as the most appropriate methods. B methods are, as mentioned, acceptable methods that can be used in cases where an A method cannot be applied, and furthermore, C methods are methods that are not to be used. We started collecting data from the 1st quarter of 2008.

For the sampling design, we have used Statistics Norway’s business register. In accordance with Statistic Norway’s own principles, we have chosen to place most of the burden on large businesses. Overall, our sample accounted for over 52 per cent of the total turnover in the population of NACE Rev.2. 73.110 and about 40 per cent for NACE Rev.2. 73.120.

The weights were gathered in the 3rd quarter of 2008 for NACE Rev.2 73.110, and will be updated every two years using information collected directly from the companies. In these periods, the index will also be chained, and the base period will be regenerated. For NACE Rev.2 73.120, we will use weights collected from Statistics Norway’s structural business statistics. These will also be updated every two years.

The results from 2008 to 2011 indicate that the total index follows a development with a continuous increase. The index is shown in table 9.1 and an illustration is given in figure 9.1. From the 1st quarter of 2008 to the 1st quarter of 2011, the index for advertising services shows a growth of almost 12 per cent.