TNS: U.S. Ad Spend Grew 0.2% in First Nine Months of 2007

Total measured advertising expenditures in the first nine months of 2007 inched upward just 0.2 percent year over year, reaching $108.2 billion, according to TNS Media Intelligence, reports MarketingCharts.

Total measured spending in the third quarter was up 1.3 percent 3Q06, reversing declines in the first half of the year.

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Tables referenced in this article:

1. Ad spending, by medium, 1Q07 - 3Q07 vs. 1Q06 - 3Q06
2. Ad spending share by medium, 1Q07 - 3Q07 and 1Q06 - 3Q06
3. Advertising spend by advertiser, 1Q07 - 3Q07 vs. 1Q06 - 3Q06
4. Top 10 advertising categories, 1Q07 - 3Q07 vs. 1Q06 - 3Q06
5. Branded entertainment: Brand appearances vs. advertising, 3Q07

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“The anemic growth rates in measured ad spending reflect a market that is under stress from cyclical business conditions and fundamental structural changes,” said Jon Swallen, SVP of research at TNS Media Intelligence. “Deepening concerns about lower corporate profits, a softening economy and reduced consumer spending have prompted marketers to be cautious with their advertising budgets.”"The ongoing shift of money towards untracked digital alternatives also contributes to the present slowdown in measured spending,” he said.Measured Ad Spending by Medium

Highlights of the TNS data follow (for details, see table of ad spending, by medium, 1Q07 - 3Q07 vs. 1Q06 - 3Q06):

• Internet display advertising continued to lead the market, increasing 17.2 percent to $8.4 billion in expenditures.
• Consumer magazines posted a 6.4 percent gain to $17.3 billion on flat ad page volume.
• Cable TV spending was up 4.7 percent to $12.7 billion.
• Outdoor advanced by 4.4 percent to $3.0 billion.
• Broadcast TV media continued to experience weakness in the third quarter and turned in nine-month spending declines even as the volume of ad time sold increased slightly.
• Spot TV expenditures, facing progressively more difficult comparisons against record-setting levels of 2006 political advertising, tumbled 6.8 percent to $11.2 billion.
• Network TV was down 3.0 percent to $16.2 billion despite an increase in ad time.
• Syndication TV fell 4.6 percent to $3.0 billion.
• Advertising expenditures in Newspaper and Radio media remained soft during the third quarter. And for the year-to-date period, marketers lowered their Local Newspaper spending by 5.1 percent to $16.6 billion, with a commensurate reduction in ad space. Radio expenditures slipped 1.8 percent, to a total of $8.0 billion.

Share of Measured Spending by Medium

Directional shifts in measured ad spending are illustrated and summarized by the share allocations of individual media types (see table of measured ad spending share by medium, 1Q07 - 3Q07 and 1Q06 - 3Q06):

• Internet display advertising gained 1.1 share points and finished the period at 7.7 percent of total expenditures.
• Magazines accounted for 20.2 percent of measured spending, up from 19.3 percent a year ago.
• The offsetting share declines came from Newspapers (down 1.0 share point to 17.8 percent) and Local TV (down 0.8 share points to 11.2 percent).

Measured Ad Spending by Advertiser

During the first nine months of 2007, the top 10 advertisers spent a combined total of $13.3 billion in measured media, a reduction of 2.3 percent from last year. However, the pace of spending for this select group picked up in the third quarter, advancing 3.1 percent.

Expenditures by the top 50 marketers, a more diversified group representing one-third of the measured ad economy, were down 2.2 percent year-to-date, to $34.3 billion. Outside the top 50, the segment which has been principally responsible for industry growth in recent years, spending rose 1.4 percent versus last year.

Procter & Gamble maintained its position as the largest advertiser with $2,466.5 million in spending, up 1.3 percent from last year. See table of measured advertising spend by advertiser, 1Q07 - 3Q07 vs. 1Q06 - 3Q06.

General Motors had the largest reduction among the top 10 as its expenditures fell 18.0 percent to $1,425.8 billion. However, third-quarter spending was up 2.0 percent versus last year, the first quarterly increase for the automaker in over two years.

Telecommunication companies kept their grip on three of the top 10 spots:

• AT&T expenditures were off 5.1 percent to $1,663.4 million. The reductions were mostly in corporate promotion messaging as opposed to branded product campaigns.
• Higher spending behind core wireless businesses helped lift the total outlays at Verizon Communications (up 5.8 percent, to $1,514.1 million) and Sprint Nextel (up 12.4 percent, to $997.8 million).

On the other side of the ledger, top diversified media companies each trimmed their measured ad spending:

• At Time Warner, scaled-back marketing support for the AOL ISP service more than offset increased budgets at the movie studios. Total expenditures contracted by 2.2 percent, to $1,197.9 million.
• Spending at Walt Disney fell by 6.0 percent, to $948.4 million and at News Corp. by 5.7 percent to $851.7 million on lower levels of advertising for their TV networks and motion picture releases.

Measured Ad Spending by Category

The top 10 advertising categories in the first nine months of 2007 spent $54.3 billion, up 0.6 percent from a year ago. In aggregate, they account for approximately one-half of all measured ad spending. See table of top 10 advertising categories, 1Q07 - 3Q07 vs. 1Q06 - 3Q06.

• Financial Services maintained its top position with $6.7 billion in expenditures, up 5.5 percent for the nine month period.
• Despite the spreading turbulence in mortgage and banking markets that started in May, ad spending by mortgage lenders and retail banks continued to expand at double digit rates during the third quarter.
• Direct Response had the largest percentage gain, up 15.1 percent to $5.4 billion. The category showed deep strength with higher ad spending levels across a broad range of brands.
• Personal Care Products gained 8.3 percent, paced by aggressive spending hikes from several top advertisers.
• Total spending within the Telecommunications category fell 4.0 percent to $6.6 billion, dragged down by Vonage Holdings and the AOL division of Time Warner.
• The ongoing slump in automotive sales still extends to advertising budgets as well. Non-Domestic Auto dropped 6.1 percent to $5.9 billion and Domestic Auto shrunk 9.1 percent to $5.1 billion. Automotive advertising has now declined for nine consecutive quarters.

Outside the top categories, the impact of a cooling housing market was seen in lower rates of ad spending for Real Estate (off 13.9 percent to $2.1 billion) and Home/Building Retailers (down 1.9 percent to $3.5 billion).

Branded Entertainment

TNS Media Intelligence monitors Branded Entertainment within network prime time and late night programming, and identifies Brand Appearances and measures their duration and attributes.

Given the short length of many Brand Appearances, duration is a more relevant metric than a count of occurrences for quantifying and comparing the gross amount of brand activity that viewers are potentially exposed to in the program versus in the commercial breaks, TNS said.

(See table of brand appearances vs. advertising, 3Q07)

In the third quarter of 2007, an average hour of monitored prime time network programming contained eight minutes, 16 seconds (8:16) of in-show Brand Appearances and 15:15 of network commercial messages. The combined total of 23:31 of marketing content represents 39 percent of a prime-time hour.

• Unscripted reality programming had an average of 9:41 per hour of Brand Appearances, compared with just 4:24 per hour for scripted programs such as sitcoms and dramas.
• Late night network talk shows had even higher levels, averaging 15:31 per hour.
• The combined load of Brand Appearances and network ad messages in these late night shows reached 30:34 per hour, or 51 percent of total content time.