Advertising’s Key Role

November 16, 2015

A new report released today examines advertising’s contribution to U.S. GDP and the economy in general. The report found that advertising contributed an astounding $3.4 trillion to the U.S. GDP in 2014, comprising 19 percent of the nation’s total economic output. This is roughly equal to the total GDP of Germany.
This new study, commissioned by the Association of National Advertisers (ANA) and The Advertising Coalition (TAC) – which represents the nation’s leading advertisers, advertising agencies and media companies – confirms that advertising is a key contributor to GDP, national employment and labor income in the U.S.

The research by IHS Economics and Country Risk provides a comprehensive assessment of the contribution of advertising to national, state, and regional economic activity across 17 industries.  The data details the impact of advertising on the economy of the U.S., the 50 states and each of the nation’s 435 congressional districts.

The study found that:

  • Advertising expenditures generated $5.8 trillion in overall consumer sales including direct, indirect and induced expenditures;
  • The expenditures represent 16 percent of all sales activity in the U.S.;
  • Advertising spending will increase at an average annual rate of 3.3 percent through 2019;
  • By 2019, advertising will directly and indirectly foster $7.4 trillion in U.S. economic activity; and
  • By 2019, advertising will help support more than 23 million U.S. jobs.

Advertising also supported 20 million American jobs in 2014, according to the IHS study.  As such, the advertising industry supported $1.9 trillion in salaries and wages, or 17 percent of the total labor income in the U.S. last year, with every job in advertising supporting another 34 American jobs in other sectors.

IHS researchers also examined the severe adverse effect of a tax proposal that would substantially alter the treatment of advertising as an ordinary and necessary business expense, which can be deducted 100 percent in the year in which it is expended. This restrictive proposal would only allow businesses to deduct 50 percent of all annual advertising expenses with the balance to be amortized over five years. The study concluded that this change would have a devastating impact on businesses, jobs and our national economy as a whole.  

ANA is proud to see data that affirms that advertising is a crucial contributor of revenue and a true engine of job creation in the U.S.

The full report, an executive summary and other related materials can be found here.

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