While new media tends to be associated with delusions of an effortless, viral-promotional road to success, small, information-sector firms in the U.S. on average have relatively high advertising expenses. In 2005, small corporations (corporations with business receipts under $1 million) and nonfarm sole proprietorships had advertising expenses amounting to 1.4% and 1.2% of business receipts, respectively. In the information sector, the corresponding figures for small corporations and sole proprietorships were 1.9% and 3.8%. Sole proprietorships, which are likely to be younger and more innovative than small corporations, had much higher advertising expenses.
Small, new-media businesses have much higher advertising expenses than small, traditional information businesses. Among sole proprietorships, the information-sector subcategory “Internet publishing and broadcasting” had advertising expenses amounting to 10.0% of business receipts. That contrasts sharply with advertising expenses of 1.1% of business receipts for “Broadcasting (except internet) and telecommunications”.
Data note: Based on 2005 IRS data on advertising expenditure reported on business tax returns.