Zenith: American TV Ad Spending Rebounds, Albeit At A Slower Rate

Despite a pronounced shift in ad spending toward other media and forms of marketing, TV ad spending continues to grow in America, but it has slowed down dramatically, according to a new report released today by ZenithOptimedia Group. Television advertising, which grew at an average annual rate of 6.3 percent through the 1990s, is now rising at a bout 5.0 percent per year, the Publicis media shop estimates, adding that subscription fees from consumers are now the fastest growing source of TV industry revenues.

"TV advertising expenditure has recovered considerably since the problems at the beginning of the decade," finds the report, noting that the rate of American TV ad growth ebbed to just 2.4 percent in 2005.

To a large extent, ZenithOptimedia says the slower rate of growth is coming from lower rates of TV advertising inflation, which is being held in check by increased supply of alternative media.

"Competition from cable and satellite channels is keeping prices down, as is the rise of Internet advertising," the report notes. "The increase in popularity of [digital video recorders], although by no means turning out as yet to be the catastrophe for advertisers some had feared, has also no doubt been making audiences somewhat more difficult to reach."

The report covers all of the Americas, of which the U.S. and Canada represent 85 percent of ad spending, though it is Latin American markets that represent its fastest rates of growth.

"Their television markets generated over $140 billion in advertising expenditure and subscription revenues in 2005, about 20 percent more than was generated in the whole of Europe and Asia Pacific," the agency estimates.

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