No ad recovery in US yet: TNS Media

MUMBAI: Total measured ad expenditures in the first nine months of 2009 in the US dropped by 14.7 per cent as compared to the same period in 2008, according to data released by TNS Media Intelligence, which provides strategic advertising and marketing information.

Ad spending during the third quarter of 2009 was down 15.3 per cent versus last year, the sixth consecutive quarter of year-over-year declines.

TNS Media Intelligence senior VP research Jon Swallen says, “The updated monthly trend line on total advertising expenditures still shows no meaningful improvement through October. The slump has now passed its first anniversary and year-on-year comparisons will become easier in the upcoming months. Going forward, the timing, strength and durability of an advertising recovery will ultimately be determined by the way consumer activity rebounds.”

Ad Spending by Media : Internet display (7 per cent) and FSIs (3.9 per cent) were the only media types with spending increases for the nine-month period. Online growth was propelled by telecom, travel and auto advertisers. FSIs benefitted from CPG companies expanding their couponing efforts as consumers became more value-conscious.

Among Television media, Cable TV networks continued to translate audience gains into a larger share of ad revenue. Year-to-date Cable TV expenditures slipped by 2.9 per cent, a much stronger performance than the TV sector as a whole.

Network TV, now faced with comparisons against the 2008 Summer Olympics bonanza, saw year-to-date spending fall 11.5 per cent and Q3 spending tumble 25.1 per cent. Spot TV expenditures (-27.5 per cent) remained depressed due to persistent weakness in auto and retail activity as well as cyclical reductions in political advertising.

Magazines (-19.7 per cent), Newspapers (-22.8 per cent) and Radio (-22.8 per cent) severely lagged the overall ad market during the January-September period. Third quarter losses for each of these broad media groupings were less severe compared to the first half of the year and this could be construed as a positive indicator. However, these media are also into their second year of steep declines. So Q3 comparisons are against the relatively low levels of year-ago spending.

Overall, local media ad spending was down 23.7 per cent through September while national media dropped 10.1 per cent.

Ad Spending by Advertiser : The top 10 advertisers in the first nine months of 2009 spent a combined total of $11.7 billion, a 5.9 per cent decrease from last year.

Across the top 100 companies, a more diversified group of marketers representing almost one-half of total ad expenditures, spending fell by 7.9 per cent. Among the top 100 companies, 67 reduced their ad budgets and only 33 increased spending.

Procter & Gamble was the largest advertiser with $1.9 billion in expenditures for the January-September period, a 15.9 per cent decline versus a year ago.

Wireless telecom providers occupied three of the top ten positions and took different paths to arrive there. Verizon Communications spent $1.6 billion, down 5.8 per cent from last year. AT&T spent $1.3 billion, 6.1 per cent less than a year ago. Both advertisers cut Q3 ad expenditures by over 20 per cent and this erased their spending increases from the first half of the year. Sprint Nextel, after slashing ad budgets in 2008, continued its aggressive marketing efforts and spent $912.8 million, a gain of 51.1 per cent and the largest rate of increase among the top ten companies.

Pfizer was the only other top advertiser to raise its spending, finishing the period at $896.6 million, up 11.9 per cent. While the acquisition of Wyeth helped push Pfizer into the top tier, the spending gains were primarily attributable to its own portfolio of prescription drugs, particularly Lipitor and Caduet.

General Motors was the lone automotive advertiser to make the top ten list, even as it reduced media budgets by 15.5 per cent during the first nine months to $1,352.6 million. Emerging from bankruptcy in July, GM quickly ramped up marketing activities and hiked its Q3 expenditures by 4.2 per cent.

Ad Spending by Category : The top ten advertising categories in January-September 2009 spent a total of $50.9 billion, down 14.1 per cent from a year ago. Automotive was the leading category at $7.4 billion, a drop of 30.8 per cent and proportionately in line with the decline in new vehicle sales. Dealer spending fell more severely than manufacturers. Automotive expenditures have now declined for 17 consecutive quarters.

Ongoing competition among wireless phone companies and TV service providers propped up Telecom spending, which finished the period at $6.1 billion, a gain of 0.4 per cent. The only other leading category with an increase was Pharmaceuticals, up 0.6 per cent to $3.4 billion.

Financial services advertising plunged 23.7 per cent to $5.6 billion, the largest rate of decline among the top ten. Online stock brokerages and investment advisors, chasing a rising stock market, showed some tentative signs of an advertising revival in the third quarter. However, retail banks and credit card companies continued to be extremely cautious with their marketing budgets.

Local advertising categories continued to sputter as seen in the results for Local Services and Amusements (down 15 per cent, to $5.6 billion) and Miscellaneous Retail (off 17.4 per cent, to $4.7 billion). The latter includes all retail segments except department stores (where spending fell by 5.1 per cent) and home furnishing/building supply stores (down 20.4 per cent).

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