In today’s economy, advertising has a tremendous influence on our consumption, and our behavior. For decades, we have seen huge expenditures on advertising spots, as well as consistent increases in the size of the advertising market. Since 1950, Advertising expenditures have consistently accounted for between 1.7% and 2.3% of gross domestic product in the United States. I am particularly interested in this subject due to the nature of the advertising product. While the majority of markets provide tangible goods and services, advertising is one of the few industries that acts as a reinforcing agent for other industries. While advertising dollars typically make up around 2.0% of GDP, economic growth due to advertising is generally significantly larger. In other words, the economic growth due to advertising each year greatly exceeds the capital investments, or inputs, to advertising. With this paper, I will gauge how increases in advertising expenditures have lead to increases in consumer spending in the United States since 1950. Additionally, I will use the developments of new media outlets as benchmarks to determine which forms of advertising have been most effective in increasing consumer spending. Several researches have looked into the impacts that advertising expenditures have had on economic growth, and have found very positive correlations between ad expenditures and consumption, innovation of new technologies, and competition within industries. However little research has been put forth as to the economic impact of emerging technologies and media outlets.
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