• by Joe Mandese  @mp_joemandese, June 5, 2007

Driven by severe cuts by the nation's largest advertisers, total U.S. ad spending declined 0.3% during the first quarter of 2007, according to estimates released this morning by TNS Media Intelligence. TNS MI President-CEO Steven Fredericks attributed some of the fall-off to comparisons with a Winter Olympics inflated ad marketplace during the first quarter of 2006, but acknowledged that "core growth rates have slowed further from last year's lackluster levels."

The lackluster nature of the U.S. ad marketplace was most evident among the biggest ad spenders, including No. 1 advertiser Procter & Gamble, which slashed its first quarter spending by 8.6% to $722.7 million due to cutbacks in its healthy and beauty aid products. No. 2 advertiser AT&T dropped 19.2% despite an aggressive advertising effort behind its consolidation with Cingular, and No. 3 advertiser General Motors was off a whopping 30.9% (see table below). Other big advertiser spending hits occurred among the studios with Time Warner down 7.3% and Walt Disney Co. down 4.6%.

In total, six of the top 10 advertisers were down, and the group as a whole has slashed ad spending 8.0% vs. the first quarter of 2006.

Top Ten Advertisers
COMPANY	JAN-MAR 2007 (Millions)	JAN-MAR 2006 (Millions)	% CHANGE
PROCTER & GAMBLE CO	$722.7	$790.3	-8.6%
AT&T INC	$512.2	$634.1	-19.2%
GENERAL MOTORS CORP	$480.9	$695.6	-30.9%
VERIZON COMMUNICATIONS INC	$459.3	$433.7	5.9%
FORD MOTOR CO	$421.4	$409.0	3.0%
TIME WARNER INC	$404.3	$436.0	-7.3%
WALT DISNEY CO	$341.8	$358.1	-4.6%
SPRINT NEXTEL CORP	$340.1	$315.6	7.8%
JOHNSON & JOHNSON	$337.8	$365.4	-7.6%
DAIMLERCHRYSLER AG	$336.4	$298.4	12.7%
TOTAL	$4,356.9	$4,736.2	-8.0%
Source: TNS Media Intelligence
1 Figures do not include Local Radio, FSI, House Ads or PSA activity.

Other shifts were evident across the media mix with TV declining 2.7%, due largely to a 7.2% drop in spending on the major broadcast networks. TV's erosion comes despite a 6.3% gain among cable networks, and a 3.7% rise among the Spanish-language networks. Spot TV was down 4.1%. And while much of the decline could be attributed to year-over-year comparisons with 2006 Olympic spending, some significant share shifts appear to be taking place among the media. Not surprisingly, the Internet continues to surge.

TNS MI estimated that Internet display advertising soared 16.7% to $2.7 billion during the first quarter of 2007, and that estimate is likely conservative as TNS MI does not currently track online search ad spending.

Radio and newspaper spending continues to erode, but consumer magazines demonstrated a strong rebound, rising 7.1% during the quarter on the strength of higher rate card pricing and a modest uptick in ad page volume.

As a result of these shifts, TV lost nearly a share point of U.S. ad spending, while the Internet gained more than a point and magazines gained a half a point.

Share of Advertising Spending by Media
MEDIUM	JAN-MAR 2007	JAN-MAR 2006
TELEVISION	44.6%	45.7%
MAGAZINES	19.2%	18.3%
NEWSPAPERS	18.0%	18.8%
RADIO	6.6%	6.7%
INTERNET	7.7%	6.6%
ALL OTHER	3.9%	3.9%
TOTAL	100.0%	100.0%
Source: TNS Media Intelligence
Note: The sum of the individual media may differ from total due to rounding.