January 25, 2023
U.S. Advertising As Percentage Of GDP Slows
- by Wayne Friedman , April 8, 2016
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.
advertisement
advertisement
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.”
2 comments about "U.S. Advertising As Percentage Of GDP Slows".
Read more comments >
Next story loading 
To me, there are numerous other explanations than to go straight to the "digital is God" answer. For instance, the simpliest solution is -- total advertising spending by clients is down. Also, what is the trend of GDP during the same period? What is the total amount spend on each of the media types?
Also, given the rise in media mix modeling and optimization, could it be that waste and poor targeting has been eliminated from broadcast TV and cable?
Overall, this seems like such a simplistic and biased conclusion that is projecting answers beyond the scope of the data.
Jay, they are talking about the share of spending against the total GDP. It's a perfectly fair comparison. As for the question of "waste" audiences there are no Tv shows that only reach heavy peanut butter users, recent buyers of Cadillac cars, Fast food fans or frequent moviegoers. No such animal exists in TV and, for that matter in any media--even digital. All that you can do is try to improve the targeting composition of your audience, subject to CPMs and other factors.