Advertising will pump $5.2 trillion into U.S. economy

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The advertising industry is projected to drive $5.2 trillion into the U.S. economy in 2005, according to a study released last month.

The study, "The Comprehensive Economic Impact of Advertising Expenditures," was conducted by research firm Global Insight for the Advertising Coalition, a group of nine national media and advertising trade associations, including the Association of National Advertisers, American Association of Advertising Agencies, American Advertising Federation and the Magazine Publishers of America.

The report tracks the relationship between the amount spent on advertising by businesses in the U.S. and the impact those expenditures have on economic activity and job creation across the country.

A better indicator

"We believe it is one of the most important studies the advertising community has ever done," said Dan Jaffe, exec VP of the ANA. "One of the problems with our industry is that we often look at advertising on a sector-by-sector or brand-by-brand basis. This number [$5.2 trillion] shows the real significance advertising has for the economic health of the United States."

The total economic activity generated by advertising, including direct spending, supplier spending and interindustry activity, will account for a projected 20.5% of the total U.S. economic activity in 2005, according to the study.

Total advertising spending by businesses in the U.S. is projected to reach approximately $278 billion next year.

Those expenditures are expected to create a direct sales impact of $2.3 trillion, a direct impact on supplier economic activity of $1.2 trillion and a direct impact on interindustry economic activity of $1.4 trillion.

In terms of employment, the advertising industry will support more than 21 million jobs in the U.S., which is 15.2% of the total national work force. This includes 10.3 million jobs from sales directly generated by advertising; 4.7 million jobs generated by suppliers of products and services to direct sales employers; and 6 million jobs from third-party businesses that support direct sellers and suppliers. 

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