Saturday, May 16, 2015

Where Search and Social Draw their Funds

The Business Pages these days tend to focus on Mergers & Acquisition, Finance, Mobile Devices, and that sector of Internet business represented by big search engines and the social Media.

It is the last category that interests me. There is a great deal of hoopla about Internet companies, but those that provide a free service all draw their income from the Advertising expenditures by the rest of the economy.

So the question arises, how big is that “funding sector.” Is it as large as the media’s interest in Internet startups and IPOs? The surprising answer is that Total Advertising Expenditure in 2014 was $161 billion; that comes to less than 1 percent (0.92%) of the Total Economy measured by GDP, or $17.4 trillion. My number for Advertising comes from Group M, a global media company. Some put the 2014 number at $180.12 billion (1.03% of GDP). In 2008, advertising was $141.7 billion, 0.99 percent of an economy of $14.3 trillion. The Total Advertising Expenditure category has actually shrunk as a percent of GDP.

A great deal of media hoopla, but in reality a tiny and shrinking slice of the economy.

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