The stall in spending growth isn't a shock, given the general financial uncertainty and specific problems in high-spending categories like domestic auto or housing. But its arrival highlights the speed with which market conditions have gone south. It was only January 2006 when TNS predicted that 2007 would produce a 2.6% gain, itself considered a "tepid" rate of growth. Now tepid looks positively sunny.
"Marketers are being cautious in the face of uncertainties in the economy, the risk of consumer spending continuing to erode, retail sales beginning to ease and the rate of growth in corporate profits slowing," said Jon Swallen, senior VP-research at TNS, a widely followed provider of ad industry information.
Online and magazines are bright spots
Some sectors, of course, fared better than others. Online ad spending continued to grow faster than any other media, notching a 15.9% increase to reach $11.3 billion, although its rate of growth fell from 17.3% in 2006. Consumer magazines grew 7% to $24.4 billion. Cable TV expanded 6.5% to reach $17.8 billion. And outdoor rose 4.9% to $4 billion.
But spending on network TV slipped 2% to $22.4 billion. Spot TV, suffering tough comparisons against a 2006 that included a surge of political advertising, sank 10.2%. And syndicated TV programming slid 1.5%.
Worse, newspapers and radio saw their declines accelerate in the final months of the year. Local papers took in 5.6% less, national papers lost 5.5%, and Spanish-language papers fell 2.5%. Radio declined 3.5%.
Spending by direct-response marketers surged 17%, while personal-care products got a 10.1% spending boost, financial services grew 5.4% and local services and amusements added 2.8%. But domestic auto spending dropped another 7.1%, import auto sank 6.6% and telecom fell 4.1%
P&G ups its spending
Procter & Gamble, again the largest advertiser, increased its spending 5.6% to total almost $3.5 billion. But seven of the other top 10 spenders cut their budgets.
"It's this slow, protracted unraveling," Mr. Swallen said. "There hasn't been any dramatic event, any sharp inflection point or a turn in the road you could look at and say, 'That was when we went off course.' We've been gradually veering onto this meandering path and we're just continuing to meander." This year so far, he added, looks like more of the same.