'Long Tail' Advertisers Are Back, U.S. Ad Expansion Reaches '03 Levels

Ad spending in the media tracked by Kantar Media expanded 8.7% during the third quarter of 2010, the most recent quarter compiled by the WPP media research unit, and marking the largest quarterly gain since the end of 2004, and providing further evidence that the ad recovery is sustainable. But while the quarter marks the strongest expansion in years, it is being measured against one of the weakest periods ever a year ago, and Kantar's chief economist Jon Swallen says the ad industry isn't out of the woods yet.


The sequential growth that we're experiencing is a great story," he said, noting that the third quarter's growth compares with a nine months growth rate of only 6.4%, "but it's coming off really abysmal numbers from last year. And on an absolute dollar basis, in terms of the total money spent on advertising, the first nine months of 2010 put us all the way back to the levels of 2003. Based on the first nine-months [of 2010], we're still 10% to 12% below the peak level we recorded in 2006."



While the renewed growth rates are encouraging, Swallen says that, "at the end of the day, what really matters, is the absolute dollars" being spent on ad-supported media.

And 2010's ad spending expansion shows the industry rebounding from the so-called "cyclical" economic factors that drew it into a recession, it does not necessarily tell what is happening with underlying, "secular" shifts that may have fundamentally shifted money from the kind of traditional media Kantar has historically tracked to newer and still largely unmeasured media that may be fueling a different kind of expansion.

In fact, among the major media Kantar tracks, Internet display ads are the only significant digital media category currently being factored in its analysis. And based on its measures, Internet display advertising grew only 7.7% through the first nine months of 2010, which is only slightly better than the overall rate of measured media growth.

According to the Interactive Advertising Bureau's Internet Advertising Report, which tracks other fast-growing forms of online ad spending such as paid search, total Internet ad spending expanded 11.3% during the first half of 2010, the most current period reported by the IAB and PricewaterhouseCoopers. The report also does not completely measure other fast-growing forms of digital media such as mobile and social that may also contributed to secular shifts in advertising budgets.

Swallen says Kantar is working hard to broaden its digital media base, and said the firm plans to release the "beta" version of a digital video advertising service later this year, and is also close to publicly reporting estimates for search ad spending.

In the meantime, he says the value of tracking traditional media provides an important element of continuity for Madison Avenue, and for the media that depend on conventional advertising budgets, to measure their underlying growth.

And in that regard, Swallen says a deeper analysis of Kantar's data does indicate some good news, because of where the recent momentum has been coming from. While much of the 2010 ad expansion has been coming from the biggest advertising categories - especially automotive and consumer packaged goods - Swallen says Kantar's analysis shows that the so-called "long-tail" of advertising, smaller brands and companies ranking outside the 1,000 largest advertisers, are also expanding their ad spending once again. That's important, he says, because they are smaller companies that are more sensitive to negative economic shifts, and tend to be a "leading indicator" going into an ad recession, and a "lagging" one coming out of a recession.

"During the third quarter, it looks as if the long-tail advertisers finally hopped on the train and increased their ad budgets," Swallen says, noting that during the quarter their growth rate was about equal to the overall growth of the advertising industry.

Swallen says that is an important indicator for two reasons. One is that the long-tail advertisers represent between 20% and 25% of total U.S. ad spending, but also, and perhaps more significantly, because it is a stronger vote of confidence for the long-term sustainability of the advertising expansion than bigger marketers, whose budgets may be more resilient, and tied to assumptions of economic growth.

"There's growing confidence on the part of smaller advertisers and that is critical, because their confidence suggests this is a sustainable advertising recovery. If automotive and [consumer packaged goods] have been our stimulus package, it's the Main Street advertisers that are our sign of an enduring recovery."


Top Ten Advertising Categories: January-September 20101




Jan - Sep 2010 ($Millions)

Jan - Sep 2009 ($Millions)

% Change







·    (Manufacturers)





·    (Dealers)










Local Services





Financial Services





Miscellaneous Retail2





Food & Candy





Direct Response





Personal Care Products




















Source: Kantar Media

1. Figures do not include FSI or PSA activity.

2. Miscellaneous Retail does not include these retail segments: Department Stores, Home Furnishing/Building Supply Stores.

3. The sum of the individual categories may differ from the total due to rounding.

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