The Impact of advertising regulation on economic
The aim of this thesis is on the one hand, to study the role of intangible advertisement
investments on economic growth and on the other hand, to see which consequences some
regulation elements of the advertising market can have on the macroeconomic impact of
After assessing the literature existing on this topic and defining precisely advertising
as a specific investment, we notice that it is impossible to measure the direct impact of
advertising on economic growth. Therefore, we will use an indirect method that will allow us
to assess the impact of advertising on key variables that favour economic growth and on
which economists agree. Indeed, the impact of advertising on these key variables is
The four variables are the following ones:
-The funding of a dynamic economic activity, especially the role of advertising in media
-Competition between the different economic actors that is stimulated by advertising under
several aspects: vertical competition (between suppliers and distributors), and horizontal
competition (capturing and safeguarding market shares).
-Household consumption: advertising concentrates on high growth- and high value added-
-Innovation: the highly innovative economic industries are those where advertising pressure is
These unquestionable facts regarding the effects of advertising allow us to develop an
original model relating advertising to economic growth efficiency. This model leads us to
notice that advertising investments considerably improve the economic efficiency of the
tangible investments they generate. This efficiency is particularly noticeable as regards media
investments (below the line media only improves economic growth efficiency up to a very
average economic performance level).
The consequences of our model in terms of regulation are significant because it shows that
countries having a low media investment rate reach significantly lower economic growth
levels than countries having high media investment rates. A high media investment rate is
consequently correlated to strong and efficient economic growth. According to the
mechanisms we have just described, it seems that this correlation leads to a causal effect of
advertising (especially media advertising) on economic growth efficiency.
In terms of regulation, the state must clearly favour an abundant offer of advertising space
to maximize the advertising investments efficiency (an economic model proves that the
extension of the advertising space offer leads to an increase in the number of advertisings in
bulk, not by a fall in prices), because the advertising space offer has a direct impact on the
media investment rate, the latter having a direct impact on economic growth efficiency.
To finish, we moderate our conclusions showing how advertising is not used in favour of
economic growth in some industries thanks to a simple method.
Keywords: regulation, advertising, growth, media, consumption, intangible assets