‘Advertising Economy’ Helps Drive $151B Into New York City Region.

The advertising industry will help drive $151 billion into the New York City metropolitan area economy this 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 18.9 percent of the region’s $800 billion economic activity and an estimated 679,151 jobs, or 16.2 percent of the area’s workforce of 4.19 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 Tax Coalition (ATC) which is comprised of nine national media and advertising trade associations.

The study estimates that total advertising spending by businesses in New York City for 2004 is estimated to come in at $12 billion, and the total revenue impact of this spending on the NYC region will be a projected $151.4 billion. The total projected impact includes the $12 billion, the direct impact on area sales of $68 billion, the impact on supplier economic activity of $33 billion and the impact on inter-industry economic activity of $38.4 billion.

The projected direct impact of $80 billion alone compares favorably with the region’s other major industries, which include: travel/tourism ($39 billion), fashion ($42.9 billion), and real estate ($121 billion). While the economic activity stimulated by advertising can be identified in the Global Insight study, each of these and most other industries use advertising to help drive their sales.

The estimated 679,151 jobs supported by advertising spending in the New York City MSA are made up of 365,934 jobs from sales directly generated by advertising, another 144,939 jobs generated in suppliers of products and services to the direct sales employers, and 168,278 jobs from third tier inter-industry jobs.

“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 our industry plays in our daily lives.”

The Comprehensive Economic Impact of Advertising Expenditures Global Insight study, conducted for the ATC, 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 ATC study was prepared under the direction of 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. Dr. Klein was assisted by Professors Cynthia Saltzman and Vijaya Duggal of Widener University in preparing the analysis for this study.

In 1988, seven industry groups formed the Advertising Tax Council to coordinate their efforts to fight federal advertising tax proposals. The ATC now includes 9 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 (NCTA); the Newspaper Association of America (NAA); and the Pharmaceutical Research and Manufacturers of America (PRMA).