Ad Spend Up A Tepid 0.6%, Internet Leads Major Investments

The U.S. advertising economy managed to eke out a tepid 0.6% growth during the first quarter of 2008, according to data on measured media spending released this morning by TNS Media Intelligence, but concerns about the economy are continuing to drag on ad spending in most of the major media.

"Enduring concerns about economic conditions and consumer spending behavior continued to cast a pall over the advertising market during the first quarter," stated Jon Swallen, senior vice president-research at TNS media intelligence. "After a hopeful start to the year, the pace of ad spending slowed perceptibly during March and early figures from the second quarter indicate little immediate or sustained improvement in the core ad economy."

While the first quarter of 2008 represents a sequential uptick from the fourth quarter of 2007, which rose a scant 0.1% in measured media ad spending, it is not an auspicious start to what ordinarily is expected to be a banner advertising year--a so-called "quadrennial year" with incremental advertising stimuli from the combined effects of a U.S. presidential election and a Summer Olympics.

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The Internet continued to be the best story among the major media during the first quarter of the year--rising 8.5% over the first quarter of 2007, according to TNS MI's figures, which account only for online display advertising and do not factor high-growth sectors such as online search.

While overall TV ad spending was relatively modest with a growth rate of 1.7%, Spanish-language TV and cable TV continued to outpace the overall medium. Network TV ad expenditures rose only 0.8% during the quarter--not the best harbinger for the 2008-08 upfront advertising marketplace, which nonetheless appears to have managed to sell out at reasonable rates of growth.

The nation's biggest advertisers outpaced the overall growth in the U.S. ad economy by a margin of more than two-to-one. The top 10 advertisers in the first quarter of 2008 spent a combined total of $4,425.5 million, a 1.6% increase from last year. However, among the top 50 companies--a more diversified group of marketers representing nearly one-third of total ad expenditures--spending fell by 1.4%.

Procter & Gamble maintained its position as the largest advertiser with $836.4 million in spending, a robust 15.8% increase versus a year ago. TNS MI said that P&G "aggressively expanded advertising support across its portfolios of personal care and household cleaning products." PepsiCo vaulted into the Top 10, posting a 39.5% increase to $334.4 million on higher spending for the Gatorade brand line.

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