Study projects economic boost from advertising

The advertising industry is projected to drive $5.2 trillion into the U.S. economy during 2005, according to a new economic study released in late November 2004.
The study, “Comprehensive Economic Impact of Advertising Expenditures,” shows that the total economic activity generated by advertising – which includes direct spending, supplier spending and inter-industry activity – will account for a projected 20.5 percent of the United States’ economic activity.
Advertising also will generate an estimated 21 million jobs, or 15.2 percent of the 139 million person national work force.
Total advertising spending by businesses in the United States for 2005 is estimated
to reach approximately $278 billion, according to the study.
These expenditures are projected to create a total revenue impact of $5.2 trillion.
The total estimated impact includes the spending on advertising, 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 estimated 21,117,903 jobs supported by advertising spending in the United States are made up of 10.3 million jobs from sales directly generated by advertising; another 4.7 million jobs are generated by suppliers of products and services to direct sales employers, and 6 million jobs from third tier inter-industry businesses that support the direct sellers and the suppliers.
The study was conducted for The Advertising Coalition by Michael J. Raimondi of Global Insight, under the direction of Lawrence R. Klein, Ph.D., Nobel Laureate in Economics and Benjamin Franklin Professor Emeritus of Economics at the University of Pennsylvania.
“This study drives home the importance of advertising in America and the massive impact it has on the nation’s economy,” said Klein, in a news release. “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 measured the impact of advertising on multiple levels in the national economy, and tracked the relationship between the amount spent by businesses on advertising and the impact of those expenditures on economic activity and job creation in the United States.
In 1988, seven industry groups formed The Advertising Coalition to coordinate their efforts to fight federal proposals to tax advertising.
The coalition now includes nine associations: the American Advertising Federation, the American Association of Advertising Agencies, the Association of National Advertisers, the Grocery Manufacturers of America; the Magazine Publishers of America, the National Association of Broadcasters; the National Cable & Telecommunications Association,the Newspaper Association of America and the Pharmaceutical Research and Manufacturers of America.