SIC vs. NAICS: Understanding the Difference. - Issue: 2001 Qtr 4
The Standard Industrial Classification (SIC) was originally developed in the 1930’s to classify industries by activities and to promote the comparability of establishment data. Over the years, the SIC codes were revised periodically to reflect the changes in the economy. It was last updated in 1987.
Since 1987, world economies have rapidly changed, bringing SIC codes under much criticism. A major change in the system was needed; thus the birth of NAICS (North American Industrial Classification System), pronounced “nakes.”
NAICS industries are identified by a 6-digit code, in contrast to the 4-digit SIC code. This allows for additional detail and flexibility in designating sub-sectors as new sub-industries emerge. The International NAICS agreement fixes only the first 5 digits of the code. The sixth digit, where used, identifies subdivisions of NAICS industries that accommodate user needs in individual countries. Thus, 6-digit US codes may vary from counterparts in Canada or Mexico, but at the 5-digit level, they are standardized.
The NAICS hierarchical level structure is as follows:
|
XX XXX XXXX XXXXX XXXXXX | Industry sector Industry sub-sector Industry group Industry US, Canadian or Mexican specific |
For example,
|
51 513 5131 51311 513112 | Information Broadcasting Radio and Television Radio Broadcasting Radio Stations |
How are these codes used?
Magazines have their circulations audited by outside companies (BPA or ABC in the US). These audit statements segment the qualified readers by SIC or NAICS codes. These codes allow an advertiser to really target the audience he is trying to reach, especially when they are cross-referenced with business titles and functions. SIC and NAICS codes are also helpful in targeting audiences with direct mail.
To request a copy of a book of classifications, go to http://www.census.gov/epcd/www/naics.html. In the meantime, if you have any other questions about SIC or NAICS, please e-mail Kristine at kristine@millerbrooks.com.
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