Ad forecasters still predict moderate growth in spending this year. But May's drop is notable, coming at a time when economic growth is falling and recession worries are growing. Gross domestic product growth slumped last quarter to 2.5% from 5.6% in the first quarter.
The last advertising downturn began with a similarly miniscule ad decline in December 2000. Then spending fell sharply in the first quarter of 2001, foreshadowing a recession that ran from March to November 2001.
Ad spending continued to fall every month through April 2002 (except for a jump in February 2002, an anomaly related to a boost from the Olympics and the timing of the Super Bowl in February '02 rather than January '01).
Ad spending has risen year-on-year every month since May 2002 (except for a decline in August 2005, an anomaly that reflects the absence of Olympics spending that boosted August 2004).
Then came May's decline: Measured ad spending simply fell, the first monthly drop since 2002 that can't readily be explained away. Spending slipped 0.3% to $12.7 billion, held down by a dip in network TV (-2.8%) and a sharp falloff in local newspapers (-9.1%).
There were bright spots in May. Internet advertising rose 18.6%; Spanish-language TV networks jumped 17%. Overall, measured ad spending between January and May 2006 rose 3.9%.
Measured spending, to be sure, is an imperfect indicator. The numbers are estimates and often are overstated based on rate-card rates. TNS's internet numbers also exclude a huge category: paid search. (Google, the leader in paid search, reported $4.7 billion in ad revenue in the first six months of 2006.)
May's 0.3% spending drop tracked with a 0.7% decline in U.S. media employment in May 2006 vs. a year earlier, according to an Advertising Age analysis of data from the Bureau of Labor Statistics.
Optimists can find hope in June's employment data. Media employment rebounded in June to about 859,000 jobs, the highest level since last December. Employment in the overall U.S. ad industry rose in June to 1.59 million, the highest level since December 2002.
The flip side: Media employment remains 5.8% below the level of May 2002, when the ad spending recovery took hold. For media, this has largely been a jobless recovery. Advertising Age and Bloomberg's AdMarket 50, meanwhile, has fallen 5.7% since May 2002.
Now the industry will wait to see if May's ad spending slip was a blip -- or a sign of what's to come.