The readers of this blog are mostly publishers and advertisers. Our audience already appreciates the importance of advertising, because that's what we do for a living. The facts and figures that follow are not meant to simply preach to the choir, but instead to get the choir ready to sing to an audience less attuned to our function in fueling commerce.
Advertising is an essential investment for businesses of all shapes and sizes -- from the family-owned merchant on Main Street to the maker of an internationally distributed product. Our Tax Code has long understood the need for advertising in business, enshrining it as a deductible expense. From time to time, however, as government looks for untapped piggybanks, scrutiny lands on advertising. Periodically at the federal level, and increasingly in cash-strapped states, schemes are hatched attempting to directly tax advertising.
On the flip side of that coin are plots to remove the tax deduction of this necessary business expense. And we are now in such a time, as the perfect storm of commingled debates on federal debt limits, recurring deficits, tax code reform and the next budget approach the horizon. Words used to frame the debate include "loopholes" and "corporate giveaways" -- casting a wide and indiscriminate net. Increasingly, the term "tax expenditure" is the device employed to shove all deductions into the same toxic box.
The debate is just getting started, and the powerful statistics that follow clearly show that removing advertising as a business expense deduction will kill jobs and crush our economy. The data come from a new study which underscores the power of advertising to stimulate job creation and economic growth. The bottom line: Advertising Powers 15% of Nation's Jobs and 20% of Total Economic Output.
Key findings show that advertising plays a major role in bolstering the nation's employment figures and economy, including:
• Ad expenditures account for $5.8 trillion of the $29.6 trillion in U.S. economic output (20%);
• Ad expenditures support 19.8 million of the nation's 133.4 million jobs (15%);
• Annually, U.S. businesses spend $279 billion in advertising;
• Every dollar of this ad investment generates nearly $20 of economic output; and
• Each million dollars of ad spending results in the creation of 69 American jobs.
The comprehensive study is called The Economic Impact of Advertising Expenditures in the United States. It assesses advertising's economic impact across 52 industries, plus government, in every state and Washington, D.C., as well as in each of the 435 U.S. congressional districts. It was commissioned by our peers at The Advertising Coalition, a group of leading trade associations, media and marketing companies, including ANA and the 4 A's.
