The Economic Impact of Advertising in Washington, Oregon, and Idaho

How much does advertising contribute to the economy in the northwest? Turns out, a lot according to IHS who recently released a study documenting the economic impact of advertising across the U.S.

IHS estimated that companies spent $297 billion on U.S. advertising last year. With this figure in tow, the research firm then went on and attributed the sales activity that was directly stimulated by advertising (promotion/awareness) and then added sales that were indirectly stimulated (supply chains) and also included the induced sales (employees hired to deliver promoted products). It’s a good modeling approach that was first developed by Dr. Lawrence Klein, recipient of the Nobel Prize in Economics.

When combined together, the $297 billion spent on advertising drove an additional $5.5 trillion in U.S. sales. Beyond this, here are the top three impacts that advertising has on our national economy:

• Every $1 spent on advertising supports $19 of U.S. economic output.
• The total impact of advertising represents 19% of U.S. GDP.
• Advertising supports 14% of all U.S. jobs.

So how does advertising impact our northwest economy?

First, in terms of adding value to an individual state economy, Washington trends right along with national averages, supporting 18.5% of its state economy. Idaho and Oregon both trend under the U.S. average but are still notable. Five years from now Washington and Idaho will grow in their state impact while Oregon will decrease a bit.

On average, the value added from advertising spending represents 17% of northwest’s economy.

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Advertising Spending Impact As Share of Economic Value Added

	2014	2019
US Avg	18.7%	18.9%
Idaho	17.8%	17.4%
Oregon	14.7%	14.1%
Washington	18.5%	18.8%

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Second, our area will see advertising employment contribution trend upward. In total, advertising related jobs make up 14% of all jobs in America. Oregon and Idaho each run notably under this level while Washington exceeds it. By 2019 advertising jobs in Washington will grow to 17% of all jobs while Oregon and Idaho will also grow, yet remain below national ad employment averages.

On average, advertising comprises 12% of the job market around the northwest.

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Advertising Employment Impact as Share of Employment

	2014	2019
US Avg	14.1%	15.4%
Idaho	10.7%	11.4%
Oregon	12.6%	13.7%
Washington	15.4%	17.0%

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Looking ahead, IHS forecasts that the economic outlook for advertising will demonstrate an average annual growth rate of 3% through 2019, bringing total U.S. ad spending to $349 billion. There is no current reason to believe that the northwest shouldn’t trend close to these growth figures during the next five years.