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Advertising adds economic value

News, 18 November 2015

NEW YORK: Advertising plays a vital role in the US economy according to a new report, supporting $5.8 trillion in output and 20m jobs in 2014.

Research by IHS Economics and Country Risk, commissioned by the Association of National Advertisers (ANA) and The Advertising Coalition, detailed the impact of advertising on the economy at both national and state levels, as the effects of advertising expenditure extended beyond the immediate industry.

So, for example, every dollar of ad spending supported, on average, about $19 of economic output (sales) nationally; and for every $1m spent, 67 American jobs were supported across a broad range of industries, throughout the economy.

The $5.8 trillion figure above represents 16% of total US output; when considered in terms of GDP, advertising becomes even more important, with its impact accounting for 19% of the total.

And the study forecast that advertising spending would increase at an average annual rate of 3.3% between now and 2019, by when the industry would help directly and indirectly foster $7.4 trillion in US economic activity and support 23m jobs.

All these figures are intended to help the industry make a case to lawmakers that legislation should not be changed to remove the cost of business advertising as a tax-deductible expense. There is a proposal that advertisers be permitted to deduct only half of annual advertising expenses with the balance to be amortised over five years.

"This new study underscores the essential nature of advertising in promoting both business and economic growth in this country," said Bob Liodice, president and CEO of the ANA.

"There are very few American industries that can compare in terms of across-the-board economic value," added Bob Flanagan, director at IHS.

The ANA has suggested that implementing the new tax proposals will cost advertisers $169bn over ten years.


Figures from Warc's Adspend Database show that for every man, woman and child in the US, $513.10 was spent on advertising last year.

Data sourced from ANA; additional content by Warc staff