Study Finds Advertising Drives 20% of US Economy

A study commissioned by The Advertising Coalition and conducted by S&P Global Market Intelligence has quantified the extraordinary impact of advertising on US jobs and growth, finding that advertising powered more than 20% of total US economic output while supporting 29 American million jobs last year. S&P Global Market Intelligence’s analysis — ‘The Economic Impact of Advertising on the US Economy’ — found that advertising was responsible for $10.4 trillion in total US sales activity last year.

Among the key findings of the report:

• Advertising supported 29 million of the 158.1 million jobs in the US last year — or 18.3% of the total US workforce.
• Advertising supported a significant percentage of all jobs in all 50 states, ranging from 14.1% to 19.7% of all jobs, depending on the state.
• Total advertising spend and stimulated sales activity totaled $10.4 trillion last year, or 21.9% of the $47.5 trillion in total output from the US economy.
• Every million dollars spent on advertising supported 59 American jobs across a broad range of industries.
• The average salary supported by advertising was over $93,000 per year, a level of compensation 26% higher than the national average.
• By 2029, advertising’s impact on the US economy will increase to $12.7 trillion in sales activity and 32.1 million US jobs.

“Advertising is a robust catalyst that stimulates extensive economic activity across every state and every sector of the US economy,” said Bob Flanagan, consulting director at S&P Global Market Intelligence. “Our data-driven models traced how advertising drives spending by US business and households, stimulates supply chain activity and enhances income-based consumption. We quantified advertising’s broader economic impact on businesses, workers, and communities across the country.”

Overall, the study found that companies spent $491 billion on advertising their products and services last year, which directly stimulated $3.5 trillion in sales activity and another $2.8 trillion in indirect sales through the downstream suppliers to those advertisers. Another $3.6 trillion in sales was through employee spending from those direct and indirect ad-supported businesses.

While conventional wisdom might suggest that the economic benefits of advertising would accrue mostly to major ad hubs like New York, Los Angeles, and Chicago, advertising had significant economic impacts across all 50 states due to sales it drives across the supply chain in every industry. In fact, the 17 states with the highest percentage of advertising-supported jobs were dominated by the Midwest (Illinois, Indiana, Iowa, Kansas, Michigan, Ohio, Wisconsin); the South (Alabama, Kentucky, Mississippi, South Carolina, Tennessee), and the West Coast (California, Oregon, Washington), as well as Maine and New Hampshire.

The study is the first analysis of the economic impact of advertising released by The Advertising Coalition since May 2022. That study found that advertising had generated $7.1 trillion in sales activity and supported 28.5 million US jobs in the prior year.

Industry leaders shared the following reactions to the study:

Bob Liodice, CEO, Association of National Advertisers (ANA) said, ”Advertising has been a driving force behind our nation’s progress, prosperity, and growth for more than a century. These findings validate that advertising’s benefits extend far beyond their impact on individual companies. Advertising supports tens of millions of jobs, powers our economy, ensures that businesses of every size can compete and thrive, and builds a stronger, more competitive America.”

Justin Thomas-Copeland, CEO, 4As said, “By helping global businesses connect with consumers, drive demand and build brands, America’s advertising agencies play a critical role in fueling innovation and keeping our economy moving. This study reaffirms what we’ve long known — that a thriving advertising industry is essential to a thriving national economy. It leaves no doubt that advertising is a proven engine of economic growth — and preserving the full deductibility of advertising as a business expense isn’t just good tax policy, it’s essential to keeping that engine running strong.”

Steve Pacheco, CEO, American Advertising Federation (AAF) said, “Those of us in the industry have always been aware of the importance of advertising – to clients, to the media, and most importantly to consumers. Those truths are supported by this study which goes further to show advertising’s role as a driver of the economy, providing trillions of dollars of economic activity and supporting millions of jobs. What is remarkable about the study is how it demonstrates advertising’s importance, not just in major markets, but in every state and every market in the country. Advertising is a vital communication tool for global marketers, small businesses, and everyone in between.”

Curtis LeGeyt, president and CEO, NAB said, “The reach and community connection of local television and radio stations provide unparalleled value to both our advertising partners and the audiences we serve. Advertising fuels local economies, supports good jobs and sustains the trusted journalism and emergency information that Americans rely on, and we are pleased that this study once again affirms this.”

The full S&P Global Market Intelligence study and its methodology can be found here, on The Advertising Coalition website.