Wider Effects of Advertising

US businesses will spend an estimated $278 billion on advertising next year, but the advertising industry will 'drive' an estimated $5.2 trillion into the economy and 'generate' 21 million jobs, according to claims and projections made in a new study for a coalition of the industry's trade associations.

The figure for total economic activity generated by advertising represents 20.5% of the US total, and includes direct spending, supplier spending and inter-industry activity, while the jobs total is equivalent to around 15% of the workforce.

The study is entitled the 'Comprehensive Economic Impact of Advertising Expenditures' and was conducted by Michael J. Raimondi of Global Insight, under the direction of Nobel Laureate in Economics Dr. Lawrence R. Klein for The Advertising Coalition, which consists of nine national media and advertising trade associations.

In terms of actual advertising spend the report forecasts that businesses in the US will splash out around $278 billion in 2005. The figure for 'impact' of $5.2 trillion is arrived at by adding this to the direct impact on sales of $2.3 trillion, the impact on supplier economic activity of $1.2 trillion and the impact on inter-industry economic activity of $1.4 trillion.

The 21.1m jobs are made up of 10.3 million from sales directly generated by advertising, 4.7 million jobs are generated by suppliers of products and services to the direct sales employers, and 6 million jobs from third tier inter-industry businesses that support the direct sellers and the suppliers.

'This study drives home the importance of advertising in America and the massive impact it has on the nation's economy', said Dr. Klein. 'Without advertising, consumers would have very limited information about the purchasing options available to them. Advertising also generates economic activity that creates jobs for more than 21 million American workers which is a significant contribution for an industry'.

The study used detailed macroeconomic and industry models to quantify the economic and employment impacts of advertising. The Advertising Coalition was formed in 1988 to co-ordinate the efforts of seven industry bodies to fight federal proposals to tax advertising. More details including a full list of member associations can be found at www.ana.net

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.