Commentary

Traditional Media Advertising Gain Small in 2007

Traditional Media Advertising Gain Small in 2007

Before leaving the forecasting field for 2007, and having explored most of the electronic media last week, here's a look at the 2007 traditional media side of the equation from TNS Media.

According to the full-year forecast released today by TNS Media Intelligence, total U.S. advertising spending is expected to increase 2.6 percent in 2007 to $153.7 billion. This anticipated gain is the smallest since the media economy emerged from its 2001 recession and follows estimated advertising spending growth of 3.8 percent in 2006. Advertising expenditures are forecast to increase by just 2.1 percent in the first half of 2007, continues the report, followed by a gain of 3.2 percent in the second half, paralleling an expected late year uptick in overall economic activity.

Steven Fredericks, President and Chief Executive Officer, TNS Media Intelligence, says "Our outlook for 2007 is tempered by the absence of two biennial advertising events, the Olympics and federal elections ...More significant, we expect share of total ad spending will continue to shift away from the Top 100 marketers, as media fragmentation enables more brands with smaller media budgets to participate in the market..."

2007 Total Ad Expenditures1 Growth Estimates

Period

% Change Vs. 2006

First Half 2007

2.1%

Second Half 2007

3.2%

Full Year 2007

2.6%

Source: TNS Media Intelligence, January 2007

1 Defined as all TNS MI measured media, including: Network TV; Spot TV; Cable TV; Syndication TV; Hispanic Network TV; Consumer Magazines; Sunday Magazines; Local Magazines; Hispanic Magazines; Business-to-Business Magazines; Local Newspapers; National Newspapers; Hispanic Newspapers; Network Radio; Spot Radio; Local Radio; Internet; and Outdoor.

"Based on our forecast, 2007 is poised to be the third consecutive year in which the advertising sector more closely tracks growth in real GDP as opposed to its historical reference mark of nominal GDP," added Fredericks.

Annual Growth Rates

Year

Ad Spend

Real GDP

2000

13.3%

3.7%

2001

(-9.8%)

0.8%

2002

4.2%

1.6%

2003

6.1%

2.5%

2004

9.8%

3.9%

2005

3.0%

3.2%

2006

+3.8% (e)

+3.0% (e)

2007

+2.6% (e)

+2.2% (e)

Sources: TNS Media Intelligence; Bureau of Economic Analysis; UBS Warburg, January 2007

Internet display advertising is expected to continue growing at double-digit rates in 2007 with Syndication TV, Outdoor and Magazines also exceeding the overall market average. Network TV is projected to be almost flat versus 2006, while newspapers and Spot TV are expected to experience outright declines in ad revenue.

2007 Projections By Medium (Ranked By Growth Rate)

% Share Of Ad Spend

% Change vs. 2006

2007 (forecast)

2006 (estimate)

Internet1

13.4%

7.2%

6.5%

Syndication TV

6.6%

2.9%

2.8%

Outdoor

5.7%

2.6%

2.5%

Consumer & Sunday Magazines

5.5%

17.9%

17.5%

Spanish Language Media

5.4%

3.3%

3.2%

Cable Network TV

4.7%

11.9%

11.7%

Business-To-Business Magazines

2.1%

3.0%

3.0%

Radio

1.7%

7.3%

7.4%

Network Television

0.6%

15.2%

15.0%

Newspapers2

-0.9%

17.7%

18.4%

Spot Tv

-2.8%

10.9%

11.6%

Source: TNS Media Intelligence, January 2007

1. Internet estimates reflect display advertising only

2. Newspaper estimates do not include web site advertising

For more complete information, please visit TNS here.

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