Ad Growth Slowed in Second Quarter

More Than Half of Categories Surveyed Cut Spending During the Period

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NEW YORK (AdAge.com) -- Ad growth slowed in the second quarter, down 3.5% from the first quarter of this year, acccoring to a report from Sanford C. Bernstein.

The deceleration in ad growth comes as a result of declines in spending in traditional media, most notably at TV stations, newspapers and radio. More than half of the ad categories surveyed by Bernstein showed a decrease, with the largest declines coming from areas such as computers, manufacturing and telecommunications.

From local to national media
Analyst Michael Nathanson, who wrote the note, said dollars are moving from local media to national media, a trend that affects particular media segments. When it comes to retail advertising, for example, the trend appears "to be shifting money out of stations, Spanish-language TV, newspapers and radio and into network TV, magazines and cable networks."

Switching to national media, however, has meant an increase for outdoor and online advertising. Ad dollars spent on online advertising rose 28.6%, to about $3.49 billion in the second quarter of 2007, up from about $2.72 billion in the year-earlier period.

According to Mr. Nathanson, there are concerns about the health of the auto, real-estate, retail and financial-services industries. When asked what this means for individual media such as TV, newspaper, and radio, Mr. Nathanson said the prospects were not great. "It is not very bullish for the long-term health of these media subsectors," he said.
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