U.S. Advertising As Percentage Of GDP Slows

U.S. advertising as a percentage of U.S. gross domestic product continues to slow — signifying major changes in the ways that advertising resources are used.

Over the past five years, total U.S. advertising has been averaging around 0.95% of GDP. Total U.S. advertising was around $165 billion in 2014, according to analysis by Bernstein Research and Magna Global.

Looking at the past 15 years — 1999 to 2014 — total advertising averaged 1.17% of GDP. Looking only at 1999 and 2010, advertising as a percentage of GDP was 1.25%.

Two major media platforms have slowed during these periods in terms of advertising growth: broadcast and cable TV.

Broadcast revenue has been flat since 2011, compared to its increase of 3% annually from 1990 through 2010. Cable advertising revenue grew at 12% from 1990 to 2010. Since 2011, it has seen just 3% gains per year.

Newspaper advertising has seen a 10% decline on a compound annual growth basis from 2010 to 2014 — a steeper drop than in previous projections. Newspaper ad revenue is now around 0.15% of GDP.

Todd Juenger, senior analyst of Bernstein Research, says these results appear to signify a shift. He points to a new direction versus older estimates: “Our original piece theorized advertising would recover to prior levels; instead, it has remained deflated, suggesting that perhaps the Internet really has enabled marketers to eliminate waste.”

by Wayne Friedman
Courtesy of mediapost