Core Ad Spending Facing Challenges While Web, Outdoor and Cable Up

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by Jack Loechner,

Core Ad Spending Facing Challenges While Web, OUputdoor and Cable According to data released recently by TNS Media Intelligence Total advertising expenditures in the first half of 2007 slipped by 0.3 percent to $72.59 billion versus the same period in 2006. Steven Fredericks, president and CEO of TNS Media Intelligence, said "For the first time since 2001, media advertising expenditures have declined for two consecutive quarters... the overall results reflect weakness across a wide range of industries and advertisers... we expect core ad spending will continue to face challenges during the second half of the year."   Internet display advertising maintained its growth leadership position, registering a 17.7 percent increase. Consumer magazines posted a 6.9 percent gain in advertising, while Outdoor expenditures and Cable TV were also up.   Broadcast TV media continued to experience weakness in the second quarter and turned in significant half-year declines. Network TV expenditures, Spot TV, and Syndication TV were down. Newspaper and Radio media also saw widening losses during the second quarter.                                                                                                                                                                                                                                                                                                                                                                                                                                     Advertising Spending by Media: First Half 2007 vs.   First Half 2006         Media         Jan-June 2007(($Mil)         Jan-June 2006(($Mil)         %(Change         Television Media         $31,627.7         $32,396.0         -2.4%            Network   TV         $11,835.9         $12,277.5         -3.6%            Cable   TV         $8,379.0         $8,148.7         2.8%            Spot   TV         $7,287.6         $7,706.6         -5.4%            Spanish   Language TV         $2,127.5         $2,154.0         -1.2%            Syndication   - National         $1,997.7         $2,109.1         -5.3%         Magazine Media         $14,551.7         $13,913.4         4.6%            Consumer   Magazines         $11,501.9         $10,756.2         6.9%            B-To-B   Magazines         $1,858.9         $2,003.7         -7.2%            Sunday   Magazines         $860.0         $824.3         4.3%            Local   Magazines         $228.5         $238.6         -4.2%            Spanish   Language Mag         $102.4         $90.6         13.1%         Newspaper Media         $12,916.6         $13,710.1         -5.8%            Newspapers   (Local)         $11,091.1         $11,763.7         -5.7%            National   Newspapers         $1,653.5         $1,766.5         -6.4%            Spanish   Language       Newspapers         $172.0         $179.9         -4.4%         Internet         $5,519.0         $4,690.4         17.7%         Radio Media         $5,139.8         $5,280.5         -2.7%            Local   Radio         $3,516.2         $3,570.4         -1.5%            National Spot Radio         $1,161.0         $1,226.0         -5.3%            Network   Radio         $462.6         $484.1         -4.4%         Outdoor         $1,903.9         $1,838.4         3.6%         FSIS         $934.7         $954.3         -2.1%         Total         $72,593.4         $72,783.0         -0.3%         Source: TNS Media Intelligence       Changes in share of spending by media type were more pronounced than normal. Internet display advertising jumped to 7.6 percent of total expenditures, while Magazines gained 0.9 share points and finished the period at 20.0 percent of ad spending. Newspapers lost one full share point. National Television and Local Television each lost share but still accounted for a combined 43.6 percent of all expenditures.                                                                                                                                          Share Of Advertising Spending By Media         Media Type         Jan-June 2007         Jan-June 2006         National TV         32.8%         33.1%         Magazines         20.0%         19.1%         Newspapers         17.8%         18.8%         Local TV         10.8%         11.4%         Internet         7.6%         6.4%         Radio         7.1%         7.3%         All Other         3.9%         3.8%         Total         100.0%         100.0%         Source: Tns Media Intelligence       During the first half of 2007, the top 10 advertisers spent a combined total of $9.0 billion, a reduction of 2.2 percent from last year. Second quarter spending for this select group was up slightly, rebounding from a steep 5.1 percent decline during the first three months.   For the top 50 marketers, representing one-third of the measured ad economy, expenditures were down by 1.6 percent for the half year, to $23.3 billion. Outside the top 50, the segment which had been a key industry growth driver leading into 2007, spending rose just 0.4 percent versus last year. Telecommunication companies claimed three of the top ten spots.   General Motors slashed its budgets by over $100 million in the second quarter, marking the fifth consecutive quarter in which expenditures fell by at least 15 percent. At Time Warner, the virtual elimination of advertising support for the AOL service led to a 7.9 percent reduction in total advertising.                                                                                                                                                                                                                     Top Ten Advertisers: First Half 2007 vs. First Half   20061         Company         Jan - June 2007(($Mil)         Jan - June 2006(($Mil)         %(Change         Procter & Gamble Co         $1,611.8         $1,583.6         1.8%         At&T Inc         $1,100.2         $1,257.0         -12.5%         Verizon Communications Inc         $1,041.1         $956.7         8.8%         General Motors Corp         $958.9         $1,280.4         -25.1%         Ford Motor Co         $864.9         $841.9         2.7%         Time Warner Inc         $793.3         $861.4         -7.9%         Johnson & Johnson         $725.9         $798.4         -9.1%         Sprint Nextel Corp         $689.2         $607.0         13.5%         Walt Disney Co         $663.8         $681.7         -2.6%         National Amusements Inc         $589.8         $376.9         56.5%         Total         $9,039.0         $9,245.0         -2.2%         Source: TNS Media Intelligence       The Top 10 advertising categories in the first half of 2007 spent an aggregate $36.47 billion, down 0.5 percent from a year ago. Financial Services maintained its top position with $4.49 billion in expenditures, up 3.5 percent. Higher spending from retail banks offset reductions by credit card brands.   Direct Response had the largest percentage gain, up 11.3 percent to $3.54 billion. Travel & Tourism advertising improved during the second quarter but still finished the half-year down 1.2 percent, to $2.85 billion.                                                                                                                                                                                                                     Top Ten Advertising Categories: First Half 2007 vs.   First Half 2006         Category         Jan - June 2007(($Mil)         Jan - June 2006(($Mil)         %(Change         Financial Services         $4,493.5         $4,339.7         3.5%         Telecom         $4,460.4         $4,760.3         -6.3%         Local Services & Amusements         $4,367.2         $4,277.7         2.1%         Auto, Non-Domestic         $3,924.5         $4,181.6         -6.1%         Misc Retail1         $3,639.5         $3,631.0         0.2%         Direct Response         $3,544.2         $3,184.3         11.3%         Auto, Domestic         $3,389.2         $3,799.7         -10.8%         Personal Care Pdts         $3,122.7         $2,925.5         6.7%         Travel & Tourism         $2,847.5         $2,880.9         -1.2%         Restaurants         $2,684.1         $2,662.7         0.8%         Total         $36,472.8         $36,643.3         -0.5%         Source: TNS Media Intelligence       For more on this summary, please visit TNS here.