Ad Spending Won't Grow As Much As Expected

TNS Revises Its Full-Year Forecast

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NEW YORK (AdAge.com) -- Total ad expenditures in the U.S. will increase by 4.9% this year, according to a report released by TNS Media Intelligence. The figure is lower than the company's previous forecast of 5.4% growth for 2006 issued in January.

Factors such as lower spending in newspaper and radio due to consolidation, a more severe cutback in ad spending in the automotive sector than previously anticipated, and a softer demand in cable TV has influenced the forecast.

After forecasting $152.3 billion in January, TNS now expects total ad spending to increase to just $150.3 billion, up from $143.3 billion in 2005. Total ad expenditure increased 3% last year.

Internet remains high
Despite the 0.5% decrease off the overall projection, certain category estimates, such as for the internet and spot TV, have gone up since the January release. Internet display advertising, which has shown double-digit growth over the past few years, leads the pack at a 13% projected gain, a number that is even higher when combined with search ads.

"Internet [growth] is continuing to come in strong", said Steven Fredericks, president-CEO, TNS. "The question is whether it is sustainable. I think it is as more and more media move to a digital platform."

At a 12.9% projected growth, Spanish-language media, which includes Hispanic network and cable TV, spot TV, magazines and newspapers, will make significant gains during 2006 as well, as Hispanic networks gain a greater audience.

Lift from political ads
Ad spending in the first half of the year is projected to gain 4.5%, with the second half seeing a 5.3% gain from political advertising, due to the midterm elections. Spot TV spending is forecasted to gain by 8.9% with a lift from political spending, which is pacing ahead of 2004 spending and may well exceed it.

"It's a banner year for political advertising," Mr. Fredericks said. "The spending is going on 12 months a year. A direct beneficiary of that is spot TV."

Print media, including newspapers and business-to-business magazines, look to remain flat over 2005 due to shifts out of the media into the internet. That does not mean that they aren't taking advantage of online advertising. Though sluggish, Mr. Fredericks said, overall print could be healthy when magazines and newspapers' digital counterparts are considered.
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