If the drop seems slight, remember that media sellers' costs are rising fast. Even more unsettling, this is the first time since 2001 that media ad spending has fallen for two quarters in a row, according to TNS Media Intelligence, which produced today's numbers.
More challenges ahead
"While the protracted downturn in automotive spending has been a prime contributor, the overall results reflect weakness across a wide range of industries and advertisers," said Steven Fredericks, president-CEO of TNS. "Given the uncertainties about near-term economic growth and consumer spending, we expect core ad spending will continue to face challenges during the second half of the year."
It's true that the first quarter of 2006 was blessed by the Winter Olympics ad bonanza, but it would have been soft even without the Olympic effect. And the second quarter declined without any particularly tough comparison from 2006.
The only media to gain were cable TV, which was up 2.8%; consumer magazines, up 6.9%; Sunday magazines, up 4.3%; Spanish language magazines, up 13.1%; outdoor, up 3.6%; and, of course, the internet, up 17.7%. That internet figure doesn't include keyword search or video advertising -- TNS doesn't track those.
TV feels pain
The brunt of the budget cuts hit network TV, which was down 3.6%; spot TV, down 5.4%; business-to-business magazines, down 7.2%; local magazines, down 4.2%; local newspapers, down 5.7%; national papers, down 6.4%; Spanish language papers, down 4.4%; local radio, down 1.5%; national spot radio, down 5.3%; and network radio, down 4.4%.
The top 10 advertisers' collective outlay fell 2.2% in the first half as five of them made significant cuts. Spending fell 12.5% at AT&T; 25.1% at General Motors; 7.9% at Time Warner; 9.1% at Johnson & Johnson; and 2.6% at Walt Disney.
Fortunately for the media business, the other half increased their budgets. The biggest advertiser, Procter & Gamble, raised ad spending 1.8% to reach $1.61 billion. Spending also rose at Verizon Communications, which was up 8.8%; Ford Motor, up 2.7%; Sprint Nextel, up 13.5%; and National Amusements, up an impressive 56.5%.
By category, declines registered in telecom, which was down 6.3%; nondomestic auto, down 6.1%; domestic auto, down 10.8%; and travel and tourism, down 1.2%. The biggest category of the half, financial services, expanded spending 3.5%. Local services and amusements spending increased 2.1%. Miscellaneous retail (excluding department stores, food stores and home furnishing and appliance stores) grew 0.2%. Direct-response advertising rose at the greatest rate, 11.3%. Personal-care products grew 6.7%. And restaurants expanded 0.8%.