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Ad spending rallies in '04

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Ad spending bounced back in 2004, and growth is expected to continue strong in 2005, according to forecasts in several recent reports from ad research companies.

Overall ad spending reached $141.1 billion in 2004, up 9.8% over 2003, according to a report released last week by TNS Media Intelligence. TNS projected ad growth of 5.1% in 2005, reaching an estimated $148.3 billion.

"Advertising spending expanded steadily throughout 2004 and has now grown at a faster rate than the general economy in nine of the last 10 quarters," said Steven Fredericks, president-CEO of TNS. "We anticipate advertising expenditures will continue on a strong upward track, despite major events such as the Olympics and the presidential election being absent this year."

According to Nielsen Media Research, ad spending was up 6.3% in 2004 over 2003, boosted by the Summer Olympics, which Nielsen said brought in an estimated $1.8 billion in ad spending.

The top advertising categories in 2004 in terms of growth were credit card services (up 32.4%), prescription drugs (up 27.6%) and automotive-factory (up 17.7%), according to Nielsen.

Big spenders

The top advertisers in terms of spending were Procter & Gamble Co., which spent $3.0 billion in 2004 (up 9.5%); General Motors Corp., at $2.6 billion (up 19.2%); and DaimlerChrysler, with spending of $1.8 billion (up 34.6%).

The Business Information Network report by American Business Media, conducted by IMS/The Auditor, found ad spending in b-to-b publications to be up 3.8% in 2004 over 2003. Ad pages for the year were up 1.4% over ad pages in 2003, according to the BIN report. The leaders in ad spending for 2004 were retail (up 13.1%), automotive (up 8.2%) and telecommunications (up 7.1%), the report found.

Online advertising is expected to be one of the strongest areas of growth in 2005. In 2004, online advertising reached an estimated $9.6 billion, up 32% over online ad spending in 2003, according to a report issued last month by the Interactive Advertising Bureau.

The report, conducted by PricewaterhouseCoopers, estimated that fourth-quarter online ad revenue hit $2.7 billion, up 23% over online ad revenue in the fourth quarter of 2003. (The final report will be out this spring.)

"All trends are pointing up," said Greg Stuart, president-CEO of the Interactive Advertising Bureau. "In the first half of the year, it wasn't just search growth, but an increase in brand advertising growth."

Traditionalists embrace new tech

As new technologies emerge that allow advertisers to communicate more brand messaging online, and as measurement gets more sophisticated, more traditional b-to-b marketers are embracing Internet advertising.

"We are increasing our online activity," said Steve Pacheco, director of advertising at FedEx Corp. He declined to comment on budget levels, but said FedEx will increase the amount of online advertising it does in 2005.

For example, for FedEx Kinko's, the merged shipping and copy center that is the result of FedEx's acquisition of Kinko's, FedEx will shift more tactical messaging online, Pacheco said.

"We will evolve the messaging platform into proving more information about the business services that FedEx Kinko's offers," he said. "The Internet really allows us to tell the full story."

One area of online advertising that is expected to increase substantially this year is online video. JupiterResearch projected that online video revenue will increase by 64%, reaching close to $200 million.

According to TNS, advertisers will continue to invest in Internet advertising, which is expected to grow by 11.2% in 2005.

Forecasts for online ad spending are even stronger from other research companies.

The Jack Meyers Report, published by Myers Publishing, projected online advertising will increase by 30% in 2005 over 2004; Kagan Research projected online ad growth of 21.6% this year; and eMarketer forecast online ad spending growth of 20.7% in 2005. M

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