Local Advertisers Finally Join Ad Recovery

Ad Rebound Broadens as Marketers Beyond the Top 1,000 Gain Confidence to Spend

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NEW YORK (AdAge.com) -- Smaller advertisers are finally joining the ad recovery, which was originally dominated by the biggest players in automobiles and packaged goods, suggesting more robust and reliable growth ahead.

United States ad spending in the first three quarters of 2010 totaled $94.1 billion, 6.4% higher than the equivalent period a year earlier, partly on the renewed vigor of smaller marketers in the third quarter, according to a report from Kantar Media.

The 1,000 largest advertisers, which make up three-quarters of all ad spending, increased their outlays 7.3% in the first nine months of the year, while advertisers beyond the top 1,000 increased spending over that period just 3.3%. But in the third quarter itself, small advertisers turned on the gas, increasing spending 8.1%, compared with a 9.1% hike in the top 1,000.

"Small advertisers, which make up 20% to 25% of total ad spending, were much more cautious in the first half of the year," said Jon Swallen, senior VP-research at Kantar Media. "But in the third quarter they went all in."

"Growth is now coming from a broader range of categories and a broader range of advertisers," Mr. Swallen added. "To me that's an indicator of better health and stronger vitality for the overall ad market. The tide is rising across the entire harbor, not just in one corner, at least as measured by categories and advertisers."

The tide is rising quite unevenly, of course, from one kind of media to another. Marketers flooded back into TV, producing a 10.5% jump in the first nine months of 2010, according to Kantar. TV benefited from comparisons against a weak 2009, the return of local car dealers and dealer associations in particular, and spending around the Olympics and the elections.

TV's gain was the biggest among major media, followed by a 7.5% jump for display advertising on the internet, a 7.3% increase for out-of-home ads and a 6.2% gain for radio.

Consumer magazines picked up strength after a weak first quarter to grind out a 2.8% gain in the first three quarters of 2010, while their print compatriots at newspapers saw a 2.9% decline, Kantar said. National newspapers improved 6.8%, mostly on gains at The Wall Street Journal, while local newspapers lost 4.4% despite steady volume from advertisers. Local papers' ad revenue probably suffered from declining circulations, which meant fewer readers for which they could charge advertisers.

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