Ad Growth Slows, But Key Categories Soar

More evidence is on its way that advertisers aren't feeling bullish about where the economy is headed. When Nielsen issues its first-half advertising expenditure report next week, it will show decelerating year-to-year growth from the first quarter to the second.

Those findings are in line with what competitor Kantar Media showed in its first-half report released last week.

Both reports come amid downgrades in ad forecasts by a number of Wall Street and Madison Avenue firms. Last week, for example, UBS reduced its estimate on U.S. ad spending growth next year to 3.6% from 4%. That downgrade was preceded recently by a number of others, including Barclays, which earlier this month downgraded its 2012 U.S. ad spend growth estimate to 4% from 5.2%.

For this year, Barclays is predicting growth of just 1.4% for the U.S. Earlier it predicted an increase of nearly 3%.

The Nielsen report will also show ad expenditure growth of 5% to around $53.2 billion for the first half of 2011 compared to the first half of 2010. That translates to 6% year-to-year growth in the first quarter, but just 3% growth in the second quarter, a Nielsen spokeswoman confirmed.

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Just last week, Kantar reported a similar trend, saying that U.S. spending growth slowed from the first quarter to the second quarter. The result was at least partly due to curtailed spending by major advertisers. According to the WPP-owned research firm, second-quarter spending was up just 2.8% compared to the same period in 2010, while year-to-year growth in the first quarter was up 4.4%.

Curiously, the Nielsen report will also indicate that six of the top 10 fastest-growing categories reached five-year highs in terms of percentage gain increases.

According to Nielsen, the automobile insurance category grew 25% in the first half of 2011 compared to the same period last year, making it the fastest-growing sector in the industry. And per the media and market research firm, that category has not seen growth that large on a percent basis since the first half of 2007.

Other categories showing five-year growth highs per Nielsen include banking, up 24%; legal services, up 14%; wireless phones, up 13%; movie studios, up 12% and quick service restaurants, up 9%. Other big categories were up significantly as well. Automotive was up 12%, financial institutions were up 19% and general insurance companies were up 11%.

While those category growth figures would seem to be at odds with the quarter-to-quarter spending deceleration, the Nielsen spokeswoman said that overall category spending declines outweighed the sectors showing increases.

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