Ad Spending Rose in 1Q; Biggest Players Boosted Spending

Despite some recent reports souring on the 2006 ad market, a new analysis shows that spending in the first quarter rose 5.6 percent, thanks to a predicted bump from the Winter Olympics and strong growth in the Internet and Spanish-language television sectors.

The analysis from ad-tracker Nielsen Monitor-Plus shows that Internet spending (not including paid search) soared 46.4 percent over last year's first quarter, while Spanish-language television jumped 14.3 percent. Partly because of the $1.1 billion spent on NBC's Winter Olympics (which actually lost money for NBC Universal) and thanks to ratings surges for mega-hits like "American Idol" and "Grey's Anatomy," network television increased 11.1 percent.

Outdoor--which is projected as a growth medium as people spend more time away from home and work--grew at a 12.8 percent clip.

Cable television, mired in a sluggish upfront and the subject of dour growth projections, grew at a meager .2 percent.

Two other struggling sectors saw significant year-over-year spending declines: local newspapers (down 5.1 percent) and network radio (down 6.6 percent). The newspaper drop came even with some hotly contested political primaries in pockets of the country.



The slow-growth local television market appears to have benefited from early-year political advertising--which will accelerate come fall--with a 4.8 percent growth in the top-100 markets.

The Monitor-Plus report also showed that the nation's top 10 advertisers boosted spending by 11.4 percent (to $4.6 billion) in the first quarter compared to a year ago. Two telecommunications behemoths displayed the highest growth rates: AT&T and Verizon. Largely due to a pricey campaign to introduce itself as the new AT&T following the welding of AT&T and SBC, AT&T increased spending 76.5 percent to $533 million. Verizon, which is battling other wireless providers, boosted ad outlays by 46.1 percent to $345 million. (Overall, spending in the wireless category jumped 12.8 percent to $788.3 million.)

Somewhat surprisingly, a struggling General Motors, the country's No. 2 advertiser, didn't cut back on advertising; instead, it increased spending by 16.1 percent to $770 million. But slumping competitor Ford apparently looked to marketing as a way to save costs--trimming ad spending by 6.2 percent, down to $417 million. DaimlerChrysler joined Ford in a rollback, reducing spending by 9.6 percent to $338 million. Also in the automotive arena, local dealerships nationwide reduced spending by 7.4 percent to $1.1 billion.

The nation's leading advertiser, Procter & Gamble, upped spending by 10.8 percent to $839 million.

Another traditionally large advertiser, Johnson & Johnson--which created a stir by sitting out the May upfront and opting to conduct its pre-season business next month--dropped first-quarter spending by 19.5 percent to $324 million. That was the largest decrease of any of the top-10 advertisers by far.

Despite the drop at J&J, which does significant advertising for its prescription drugs, the Rx category as a whole rose 6.6 percent to $1.1 billion. The increase came despite moves in Congress and among public-interest groups to limit direct-to-consumer advertising.

The competitive credit-card category rode increased spending by Visa, American Express, and JP Morgan Chase to a 22 percent jump (to $491 million). And Americans' reluctance to cook and busy lifestyles are tempting the restaurant category to make larger plays for their business: The restaurant sector rose 22.7 percent to $451 million, while quick-service restaurants jumped 13 percent to $1.1 billion.

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