• by Joe Mandese , September 30, 2008

The U.S. advertising marketplace still may not be in a technical recession, but the spending confidence of U.S. advertising executives has been eroding for the past year, according to a twice-annual survey of some top marketers and media buyers. The study, the Media Economy Report conducted by Advertiser Perceptions Inc., found that the percentage of advertising budgets that are expected to increase over the next six months fell to 33% during the April/May period that its most recent survey was conducted, an eight percentage point drop from the Spring of 2007. The percentage of advertising budgets expected to decline during that period, increased five percentage points to 23%.

While the economic expectations of advertising executives likely have deteriorated with recent macro and micro economic news, results of the Spring 2008 report suggest a downward spiral of advertising confidence that will likely be reflected even more profoundly when API begins surveying industry executives for its Fall 2008 survey beginning this week.

According to recent tracking data from TNS Media Intelligence, the U.S. ad economy declined 1.6% during the first half of 2008. While ad spending in the media measured by TNS MI managed to post a modest 0.6% gain during the first quarter of the year, the bottom fell out of the market during the second quarter, which decline 3.7%, and preliminary numbers from July - the first month the third quarter - show an even more pronounced decline.

Not surprisingly, the most severely impacted media in TNS MI's tracking data - newspapers, radio, broadcast TV, etc. - correspond to the eroding economic confidence of ad executives detected in API's perceptions research.

The percentage of national newspaper ad budgets expected to decline over the next six months was 44% this spring vs. 27% last year, while expected local newspaper declines rose to 44% vs. 32% last year.

A third of radio ad budgets were expected to decline this spring vs. only 20% last spring, while 29% of magazine ad budgets were expected to falter vs. only 21% the previous year.

Thirty percent of broadcast TV budgets, and 20% of cable TV budgets were expected to decline this spring vs. 22% and 11%, respectively, last spring.

The only major medium that appears to be beating that trend is online. Only 4% of online ad budgets were expected to decline this spring vs. 5% a year earlier.

 

Percentage Of Ad Budgets Expected To Change Over Next Six Months
	Decrease	Maintain	Increase
Spring 2008	23%	44%	33%
Fall 2007	19%	44%	37%
Spring 2008	18%	41%	41%
Source: Advertiser Perceptions Inc. Spring 2008 report. Base = 1,811 advertising executives.