Spending Fell (Only) 2.7% in '08. The Real Issue: '09

Walmart Stores Spending Up 16%; Retail Surpasses Auto as Top Ad Category

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LOS ANGELES (AdAge.com) -- The top 100 U.S. advertisers cut ad spending 2.7% last year, only the fourth spending drop since Ad Age began ranking the Leading National Advertisers in 1956. Last year's slide compared with declines of 0.4% in 1970, 3.9% in 1991 and 1.3% in 2001, all recession years.

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2008 was not great, but 2009 is looking even worse.

Leading National Advertisers report:

Complete LNA Report 2009
Expanded Data on the 100 LNA With Report Links Back to 1997.
Marketer Trees 2009
Dig for Deep Data on the Nation's Top Advertisers: Brands, Agencies, Spending.
Verizon Tops AT&T as Most-Advertised Brand
Walmart Vaults Into No. 5 Spot With 66% Increase in Measured Media Spending
But dig deeper and there's a surprise in the numbers: Amid all the economic upheavals and uncertainty, 50 of the 100 LNA marketers increased total ad spending in 2008 (including measured media plus unmeasured disciplines), according to an Ad Age DataCenter analysis.

Among the big gainers was Walmart Stores, which boosted estimated total U.S. ad spending 15.9% to $1.66 billion. The giant discount retailer turned recession into opportunity; measured media spending on its flagship Walmart chain soared 66.4%, making Walmart the nation's fifth-most-advertised brand.

Procter & Gamble Co. remained the nation's largest advertiser, though its estimated total U.S. ad spending fell 6.6% to $4.8 billion. P&G has ranked No. 1 or No. 2 in 52 of the 54 years Ad Age has published the LNA report.

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The 2.7% spending decline calculated by Ad Age for the 100 LNA reflects a drop of 3.8% in measured media, tempered by a 1.2% decline in unmeasured disciplines.

Unmeasured spending safer
The drop proves that unmeasured fields aren't immune to cutbacks, but it's also true that unmeasured disciplines have fared better than measured media as marketers continue to shift spending.

Media measured by WPP's TNS Media Intelligence -- such as TV and print -- accounted for 56.5% of top marketers' U.S. ad spending in 2008, down from 57.2% in 2007, according to Ad Age's 100 LNA report. The rest of spending came from unmeasured fields, including direct marketing and promotion.

The overall picture for this year is shaping up to be more grim: Measured media spending for the top 100 advertisers tumbled 8.1% in the first quarter, according to TNS.

Moreover, Publicis Groupe's ZenithOptimedia forecasts an 8.7% decline in U.S. media spending in 2009 and 1.7% drop next year, with a tepid recovery -- 1.1% growth -- in 2011. It predicts U.S. spending declines of 5.1% in 2009 and 1.4% in 2010 and then growth of 2.4% in 2011 when it combines media spending and unmeasured disciplines.

Last year's ad-spending drop may seem relatively mild. But full-year figures smooth out the stunning declines that came after financial markets imploded last fall.

Following GDP down
The nation officially has been in recession since December 2007, but gross domestic product actually grew in the first six months of 2008 and slipped just 0.5% in the third quarter. The economy then fell off a cliff: GDP plunged 6.3% in the fourth-quarter 2008 and 5.7% in first-quarter 2009.

U.S. total measured media spending followed a generally similar trend but with deeper declines: Up 0.6% in first quarter 2008, down 3.7% in the second quarter, down 2.0% in the third quarter -- and then down a seismic 9.2% in the fourth quarter and 14.2% in this year's first quarter, according to TNS.

In a year of wrenching change, retail last year supplanted automotive as the biggest ad category based on measured spending. U.S. auto sales last year skidded 18%; auto spending dropped 15%.

The recession in automotive, and depression in Detroit, continued this year as the government guided General Motors Corp. (No. 4 on LNA) and Chrysler (No. 36) into bankruptcy reorganization.

The U.S. government has long been a major advertiser, ranking No. 31 on the 100 LNA based on spending for military recruitment and anti-drug campaigns.

Thanks to bailouts, taxpayers now are big shareholders in other major advertisers. The U.S. government owns 8% of Chrysler Group and 34% of Citigroup, and it soon will own 61% of GM.

Taxpayers also have an 80% voting stake in insurer American International Group following its bailout. The AIG brand last year had measured spending of $105.7 million, just behind Colgate and ahead of Papa John's and Tide. AIG spent heavily on ads touting its now-discarded slogan: "The strength to be there."

Source: WPP's TNS Media Intelligence (www.tns-mi.com) and TNS's Marx Promotion Intelligence (www.tnsmi-marx.com). Spending based on 19 measured media, aggregated by Ad Age DataCenter. Numbers rounded.

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