Sputter Alert: Quarterly Ad Growth Falls To 0.1%, Outlook Remains Muted

by Joe Mandese, Mar 25, 2008, 8:30 AM

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The U.S. ad economy narrowly escaped a downturn in 2007, according to new data released this morning by TNS Media Intelligence, but the ad tracking firm says the marketplace has become "engulfed by the spreading pessimism about general economic conditions," and its outlook for 2008 remains muted despite the cyclical boon from Olympics and election year stimuli.

"Marketers are being cautious with their core ad budgets faced with concerns about consumer spending and corporate profits," stated TNS MI Senior Vice President-Research Jon Swallen, who in recent quarters has described the slowdown in U.S. ad spending as more of a "stagflation" than a "recession," as smaller and mid-size advertisers have cut back due to economic volatility.

TNS MI said overall spending across the media it monitors few only 0.2% to $149 billion in the U.S. during calendar 2007, but the rate of growth actually ebbed to just 0.1% during the fourth quarter.

Online media remained the strongest sector among the major media, with Internet display advertising growing 15.9% in 2007 to $11.31 billion, according to TNS MI's estimates. Rate card revenue estimates for consumer magazines registered a 7.0% percent gain to $24.43 billion on the strength of higher spending by consumer packaged goods marketers.

Cable TV spending surged in the second half and finished 2007 at $17.84 billion, an increase of 6.5%.

Outdoor advanced by 4.9% to $4.02 billion.

Among television media, full-year Network TV expenditures declined by 2.% to $22.43 billion. Spot TV, in the face of difficult comparisons against record-setting levels of 2006 political advertising, plummeted 10.2% to $15.59 billion. Syndication TV fell 1.5% to $4.17 billion.

Ad spending declines in newspaper and radio media accelerated during the fourth quarter. For the full year, Local Newspapers were down 5.6% to $22.66 billion and aggregate radio expenditures slipped 3.5% to $10.69 billion. Both media suffered from spending reductions by automotive, media and retail advertisers.

Procter & Gamble was again the largest advertiser with $3,486.5 million in spending, up 5.6% versus a year ago. Verizon Communications posted the highest growth rate among the top 10, up 11.1% to $2,136.5 million behind higher spending for its core wireless division and FiOS television service. The largest decrease in the group was from General Motors, where 2007 outlays fell 7.7% to $2,106.4 million. However, aggressive model re-launches from its Chevrolet and Cadillac divisions contributed to a fourth quarter spending surge of 24.5%.

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