The “advertising Economy” Helps Drive $228 Billion

[Marker]

The principals involved in this study have, at my request, sent the
specific breakdowns for Detroit and Michigan to me. This information
could be used to further justify our existence and the need for
incentives to the beancounters in Lansing....
If you need these one page breakdowns they are in pdf format....I will
be happy to send them to you.


Regards

Mark

The “Advertising Economy” Helps Drive $228 Billion in Michigan



Washington, D.C., December 13, 2004 – The advertising industry will help
generate $228 billion in the economy of Michigan next year, a new study
found. The total economic activity generated by advertising – which
includes direct spending, supplier spending and inter-industry activity
– is estimated to account for a projected 25 percent of the state’s $926
billion economic activity and an estimated 814,352 jobs, or 18 percent
of the state’s workforce of 4.6 million.



These findings come from a new study conducted by Michael J. Raimondi of
Global Insight, under the direction of Nobel Laureate in Economics Dr.
Lawrence R. Klein entitled the “Comprehensive Economic Impact of
Advertising Expenditures.” The study was conducted for The Advertising
Coalition, which is comprised of nine national media and advertising
trade associations. Jim Davidson, of the Washington, D.C. firm,
Davidson & Company, is counsel to the coalition.



The study estimates that the total revenue impact of advertising
spending on the state next year will reach a projected $228 billion.
The total projected impact includes the direct impact on area sales of
$119 billion, the impact on supplier economic activity of $50 billion
and the impact on inter-industry economic activity of $58 billion.



The estimated 814,352 jobs supported by advertising spending in the
state are made up of 408,131 jobs from sales directly generated by
advertising, another 183,505 jobs generated in suppliers of products and
services to the direct sales employers, and 222,716 jobs from third tier
inter-industry jobs created by the supply and direct sales activity.



“This landmark study demonstrates that advertising stimulates additional
purchases by providing important and useful information to a broad range
of purchasers in households and businesses - a critical function in a
market economy” said Dr. Klein. “Advertising fulfills the critical role
of informing and educating consumers about the many choices available to
them in the marketplace. The dollar figures underscores the vital
service and economic role this important industry plays in our daily lives.”



The Global Insight study measures the impact of advertising at multiple
levels in the area economy. The study defines 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.



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



The Advertising Coalition 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; the Newspaper
Association of America (NAA), and the Pharmaceutical Research and
Manufacturers of America.



# # #

News Contact: Jim Davidson

Davidson & Company for The Advertising Coalition

202-638-1101, jh-@davidsondc.com

[Brent]

The study sounds interesting, but you need to remember advertising isn't just TV commercials. The article doesn't break it down, but I would guess the 'advertising' that we are interested in as film crews is probably only a few percent of the $228 billion they are talking about.

Advertising in a broad sense can include print, radio, billboards, buses, in-store merchandising, coupons, flyers, web sites, tshirts, mail-outs, telemarketing, sending spam, etc.

It sounds like one of those studies that looks really great until you begin to put things in context.

"...advertising stimulates additional purchases by providing important and useful information to a broad range of purchasers...". Gee. Really? I hope they didn't pay too much for this level of insight. Next they'll be telling us that advertising influences our choices of goods and services.

And the job numbers they quote? "... 408,131 jobs from sales directly generated by advertising, another 183,505 jobs generated in suppliers of products and services to the direct sales employers, and 222,716 jobs from third tier inter-industry jobs created by the supply and direct sales activity" - So basically anyone who sells anything, supplies anything to someone who sells stuff or supports any sort of industry that results in people selling stuff is in advertising. OK.  The guy who puts the gas in my car will be so happy to know he's an ad exec.