Advertising Is Not Dead

The growth of the advertising business has become one of the most questionable issue of this century: Does it bring such significance in world’s business? According to DB5, a market research firm, since the 1920s, the U.S. advertising industry has always been about 1 percent of U.S. GDP, consistently varying from 1 percent to 1.4 percent, averaging about 1.29 percent. Many people perceive that kind of information as a sign of the fall of advertising industries, but I disagree with the statement. I believe that advertising industries play a significant role in shaping the world’s economy due to its impact to enterprises that invest on it.

If we set the scope to a smaller scale, locally, in an enterprise view, it is certain that advertisement is vital; it can bring major revenue increments in many companies. That statement might sound pragmatic, but in reality, the number of companies that invest on advertising industries have increased significantly. According to the World Federation of Advertisers, in 2002, companies’ advertising expenditure already exceeded 700 billion euros worldwide, and the number has increased even more until now. It is nearly impossible that such numbers are invested for nothing. We can see that enterprises recognize the importance of advertisements for their future growth and popularity in the marketplace.

In accordance to the growth of technology, advertisements are adapting in the right direction. From the radio era, TV era, until the internet era, advertisements have managed to fit in. The method itself have started to alter from the traditional ones — physical advertisements, into the modern ones — media-based advertisements. Companies worldwide are aware of this. The investments on both methods of advertising are increasing, even though the rate of traditional advertisements are descending in major area worldwide.

The main question that might popped out so far is, “What is the correlation between the high investments on advertisements and the world economy?” The answer is pretty certain: competition. With more company investing, the consumers have to choose which product is the best. They may choose from the packaging of the advertisements that they perceived, so it will stimulate companies to innovate better on their product. With the number of innovations arise, it will cause improvements in many aspects of the products that can increase companies’ growth and revenue. The revenue itself will be cut off for some amount by the government, making it possible that the consistent growth of advertisements from DB5’s data is not a proof that it’s a boring business, but it constantly flows with the growth of companies’ revenue, and therefore, a nation’s GDP.

From the paragraphs above, we can conclude that the constant growth of the advertising industry’s revenue compared to the GDP is not a proof that it’s near death, it’s a sign that it might be one of the most vital factor that affects a nation’s GDP due to the enterprises’ investments, revenues, and contribution to the GDP number itself. Advertising is not dead, it’s growing.

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