US Adspend Slips 0.3%

“While the protracted downturn in automotive spending has been a prime contributor, the overall results reflect weakness across a wide range of industries and advertisers. Given the uncertainties about near-term economic growth and consumer spending, we expect core ad spending will continue to face challenges during the second half of the year.”

Internet display advertising maintained its growth leadership position, registering a 17.7% increase to $5.52 billion in expenditures. Consumer magazines posted a 6.9% gain to $11.50 billion in advertising. Outdoor expenditures were up 3.6% to $1.90 billion and cable TV followed with a 2.8% increase to $8.38 billion.

Broadcast TV media continued to experience weakness in the second quarter and turned in significant half-year declines. Network TV expenditures fell 3.6% to $11.84 billion, while ad spending on spot TV dropped 5.4% to $7.29 billion. Syndication TV was down 5.3% to $2.00 billion.

Newspaper and radio media also saw widening losses during the second quarter. For the half-year period, ad spending in local newspapers plunged 5.7% to $11.09 billion on a reduction of 4.7% in space sold. Marketers lowered their radio advertising budgets by 2.7%, to a total of $5.14 billion.

TNS said that whilst total ad expenditures declined by 0.3%, there was unusually wide variation around this average from individual media types. As a direct result, changes in share of spending by media type were more pronounced than normal. Internet display advertising jumped to 7.6% of total expenditures, up from 6.4% a year ago.

Magazines gained 0.9 share points and finished the period at 20.0% of ad spending. Newspapers lost one full share point and slipped to 17.8% of total expenditures. National Television and Local Television each lost share but still accounted for a combined 43.6% of all expenditures.

The top 10 advertising categories in the first half of 2007 spent an aggregate $36.47 billion, down 0.5% from a year ago. Financial services maintained its top position with $4.49 billion in expenditures, up 3.5%. Higher spending from retail banks offset reductions by credit card brands.

Direct response had the largest percentage gain, up 11.3% to $3.54 billion. The category showed deep strength with higher ad spending levels across a broad range of brands. Personal care products advanced 6.7%, lead by resurgent spending from several top advertisers. Local services & amusements (+2.1%) and Restaurants (+0.8%) achieved small gains.

Advertising spending in the telecommunications category contracted by 6.3% to $4.46 billion. This was mainly due to lower expenditures from AT&T, Vonage Holdings and the AOL division of Time Warner. The persistent malaise in the automotive category pushed non-domestic auto down 6.1% to $3.92 billion and domestic auto down 10.8% to $3.39 billion. Automotive advertising has now declined for eight consecutive quarters.

Travel & tourism advertising improved during the second quarter but still finished the half-year down 1.2%, to $2.85 billion, said TNS.

A recent report from Veronis Suhler Stevenson said that US online adspend will reach $61.98 billion, surpassing newspapers to become the leading US ad medium in 2011 (see US Online Adspend To Reach $61.98bn).

Meanwhile, in a separate forecast, TNS predicted that total US advertising spend will increase 1.7% in 2007 to $152.3 billion (see US Adspend Forecast To Increase).