Grassroots Lobbying Kit

News story: The “Advertising Economy” Helps Drive $56 Billion in Iowa

In 2004, the advertising industry helped generate $56 billion in the economy of Iowa, according to a recent study. The total economic activity generated by advertising – which includes direct spending, supplier spending and inter-industry activity – is estimated to account for a projected 19 percent of the state’s $303 billion economic activity and an estimated 227,786 jobs, or 14 percent of the state’s workforce of 1.6 million.

These findings come from a 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.

The study estimates that the total revenue impact of advertising spending on the state in 2004 was $56 billion. The total projected impact included the direct impact on area sales of $28 billion, the impact on supplier economic activity of $13 billion and the impact on inter-industry economic activity of $16 billion.

The estimated 227,786 jobs supported by advertising spending in the state are made up of 112,274 jobs from sales directly generated by advertising, another 50,262 jobs generated in suppliers of products and services to the direct sales employers, and 65,251 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 measured the impact of advertising at multiple levels in the area economy. The study defined 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 the study.

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