• by Joe Marchese , October 9, 2007

This week I came across a doctoral study examining the nature of the relationship between advertising spend and economic growth that really caught my interest (in case you are wondering, yes, I think it's sad that I just typed that sentence...). From the conclusion: "Analysis of all of the objective data relating to the developed countries clearly demonstrates that the media and non-traditional media advertising investments carried out by companies stimulate and promote consumption, innovation, competition and the dynamism of specific economic sec¬tors associated with advertising: media service providers, non-traditional media, etc."

So, in an oversimplified nutshell, the study argues that advertising is good for the economy. One rather significant disclosure; the study was financially supported by various advertising associations. But advertising association sponsorship or not, the macroeconomic arguments are both statistically logical and intuitively sound.
I have separate concerns that would strike at the route of the causal relationship between advertising spend and economic health, as it would seem just as likely that strong economic health would be a cause of an economy dedicating greater percentage of GDP to advertising, rather than greater advertising spend leading to economic health. But then again, I didn't do a Ph.D. on the subject.

So let's dismiss for a moment any doubts we might have about the causal nature of the relationship and just believe: Advertising is good for the economy because it stimulates and promotes "consumption, innovation, competition..." If this is true, it seems it would be rather important to the overall economy that advertisers have the ability to deliver their advertising messages (so that they can do all that good). And so we inevitably get to the meaning of the title of this week's article. Will the decline in the ability to effectively buy and leverage mass media to deliver advertising messages have significant adverse affects on our economy? If this article finds its way to Maximilien Nayaradou, the study's author, it's a question I'm sure he'd find quite interesting.

Obviously, the economic impact of significantly eroding the value of the cornerstone (the 30-second spot) of an industry (advertising) making up more than 2.5% of our GDP can't be ignored. But the question then becomes, can new methods for advertising message delivery fully account for the declining effectiveness of traditional advertising delivery methods? Can we maintain consumption rates of premium goods and services during sea changes of advertising mediums and methodologies?

One can clearly see the ability to deliver messaging of any sort efficiently and effectively as a key driver of efficient decision-making (whether for products, services or political candidates), as well as a key cultural driver (consumption of lifestyle and luxury products). If the simple thesis is correct, then continued economic health would rest in brands' and agencies' ability to navigate the media sea change. By assessing the challenges and opportunities of new-media advertising opportunities and blending a deep knowledge of traditional advertising techniques with new-media delivery, can advertising continue to drive consumption at current rates?

Search seems to tackle the issue of advertising improving efficient decision-making (ever have the paid results provide more value than organic results?). But, what will allow brands to capitalize on product innovation if they can't buy our attention to tell us they are the best, or simply a cool purchase? Sounds like a problem screaming for effective leveraging of social media to me. But can it happen in time, or will TiVo crash the stock market? ;-)