Internet Ad Spending Declined in First Half of '09

Cable TV Eked Out Gain as Only Bright Spot

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NEW YORK (AdAge.com) -- Surprise: The first half of 2009 was rougher on media than anticipated. How rough? Measured ad spending fell 15.4% compared with the first two quarters of 2008, according to a new report issued by Nielsen, meaning U.S. ad spending was down a whopping $10.3 billion to a total of $56.9 billion. That's enough to make full-year forecasts for 2009 from last December calling for a 0.2% decline seem quaint.

The lone bright spot: cable TV, which was the only medium to post growth in the first six months of 2009 (1.5% for the general market, 0.6% for Spanish-language), driven in part by African-American TV, which grew 14.3% during the first six months. Meanwhile, broadcast and syndication fell 7.0% and 11.6%, respectively.

Perhaps most shocking, online display advertising showed its first year-over-year decline since 2002, with a 1.0% drop in spending. Although Nielsen Online's AdRelevance product doesn't measure paid search, text ads or rich media, previous reports from the Interactive Advertising Bureau and weak first-half earnings reports from Google, Microsoft and others still paint a negative picture for the web in the first six months. According to the IAB, first-quarter online ad revenue dropped 5% to $5.48 billion, the sector's weakest quarter since the third quarter of 2007.

Year-to-Year Change in Ad Spend, by MediaEnlarge
Year-to-Year Change in Ad Spend, by Media

The display ad market was most adversely affected by steep cutbacks in spending from software products (-36%), hardware and electronics (-22%), and automotive marketers (-14%), with signs of growth from entertainment (28%), business-to-business marketers (25%) and consumer package goods (20%).

Other media that posted notable declines include network TV (-7%), network radio (-9%), Spanish-language TV (-10.1%), syndicated TV (-11.6%), local newspapers (-13.2%), outdoor (-14.9%), national magazines (-21.2%), national newspapers (-22.8%) and local Sunday supplements (-45.7%).

Taking the biggest chunk out of media revenues during the first half was the auto industry, which plunged a whopping 31.4% among national factory and dealer associations ($3.68 billion vs. $5.36 billion in 2008) and 26.2% among local dealerships ($1.69 billion vs. $2.28 billion in 2008). Also posting losses were pharmaceuticals (-11.3%), department stores (-4.4%), restaurants (-3.8%) and furniture stores (-3.6%).

A few marketing bright spots emerged, however, with spending increases from quick-service restaurants (up 5.1%), wireless-phone services (1.3%), movie studios (1.7%) and direct response (6.7%). Overall spending in the top 10 marketing categories was down 12.1% year over year, to $17.73 billion vs. $20.18 billion.

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