The Olympics effect
That dip reflects the hard comparison against a first quarter last year blessed by Winter Olympics, but strip out the Olympics effect and spending in the first quarter of this year was still soft, said Jon Swallen, senior VP-director of research, TNS.
"Factoring out that incremental ad spend from the 2006 results, it looks like first-quarter 2007 would have been up about 2.2%. Over the last three to four years advertising growth rates have been typically in the range of 3% to 6%."
The forces tapping the brakes include slowing rates of general economic growth, consumer spending and corporate profits, Mr. Swallen said. "The result was marketers taking a cautious stance in setting ad budgets for the early part of 2007."
No. 1 ad spender Procter & Gamble, the lifeblood of so many in marketing? Its outlay fell 8.6% to $722.7 million on reductions in health and beauty marketing. At No. 2 AT&T, the telecom slashed spending 19.2% to $512.2 million, although the decline represents the comparison against a quarter last year when AT&T was spending even more heavily than now on re-branding. General Motors, in the third spot, pulled back on spending by 30.9% to total $480.9 million. More declines among the top 10 came at Time Warner, Walt Disney, Johnson & Johnson and DaimlerChrysler.
But we're not just talking about the biggest advertisers. "In recent years we'd seen advertising growth being propped up by mid- and smaller-sized advertisers," Mr. Swallen said. "There was money coming into the bottom of the market that more than offset the cutbacks at the top. But in the first quarter of this year, for the first time in about three years, the rate of growth among those advertisers outside the top 100, their ad spend was flat.
"It will be interesting to see as we go through the year whether that segment bounces back," Mr. Swallen added. "They've been the swing segment that has represented the difference between an average level of total market performance, in that 3% to 6% range, as opposed to slipping onto this lower track we're currently at."
By media and ad category
All told that meant that of 19 measured media tracked by TNS, only six posted gains over the prior first quarter: outdoor, up 2.4%; Spanish-language TV, up 3.7%; cable TV, up 6.3%; consumer magazines, up 7.1%; Spanish-language magazines, up 14.3%; and, of course, the web, up 16.7%. Keep in mind that TNS web spending figures don't even include keyword search advertising, which comprises about 40% of the online market. TNS also doesn't track spending on non-traditional ad campaigns, such as events, word of mouth, or PR efforts.
The ad category most affected by declines was domestic auto (no surprise), where estimated ad spending fell 10.8% to $1.7 billion. Direct-response advertising, on the other hand, shot up 11.3% to get to $1.7 billion. Telecommunications, foreign auto, and travel and tourism also declined.
Hispanic media performed pretty well, and would have done better if it weren't for the incremental ad spending in first-quarter 2006 that resulted from big package buys by sponsors of last summer's World Cup. Spanish-language spot TV, interestingly enough, performed much more strongly than its English-language counterpart, Mr. Swallen said. "That's part of a broader picture about, over time, the growing importance of the Hispanic market and the growing proportion of marketing dollars that are being allocated to Hispanic media."