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Advertising Industry Projected to Provide $5.2 Trillion Boost to the U.S. Economy in 2005, Study Reveals

Advertising Industry Projected to Provide $5.2 Trillion Boost to the U.S. Economy in 2005, Study Reveals

Advertising supports workforce of 21 million strong New York, NY - November 22, 2004 - The advertising industry is projected to drive $5.2 trillion into the U.S. economy next year, a major new economic study has found. 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 will also generate an estimated 21 million jobs, or 15.2 percent of the national workforce of 139 million.

The findings, released today, come from a new study entitled the "Comprehensive Economic Impact of Advertising Expenditures." It 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. The Coalition is comprised of nine national media and advertising trade associations.

Total advertising spending by businesses in the U.S. 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 U.S. 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 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."

Global Insight's "Comprehensive Economic Impact of Advertising Expenditures" study measured the impact of advertising on multiple levels in the national economy. The study tracks the relationship between the amount spent on advertising by businesses throughout the economy and the impact those expenditures have on economic activity and job creation in all states, metropolitan areas and congressional districts in the United States. Global Insight's comprehensive macroeconomic and industry models work to quantify the economic and employment impacts of advertising.

Michael J. Raimondi is the Executive Managing Director of Global Insight's IT/Telecom Consulting practice. Dr. Lawrence Klein is the Benjamin Franklin Professor Emeritus of Economics at the University of Pennsylvania. He received the Nobel Prize in Economics in 1980. Dr. Klein was assisted by Professors Cynthia Saltzman and Vijaya Duggal of Widener University in preparing the analysis for this study.

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 (AAF); the American Association of Advertising Agencies (AAAA); the Association of National Advertisers (ANA); the Grocery Manufacturers of America (GMA); the Magazine Publishers of America (MPA); the National Association of Broadcasters (NAB); the National Cable & Telecommunications Association (NCTA); the Newspaper Association of America (NAA); and the Pharmaceutical Research and Manufacturers of America (PRMA).

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