Third-Quarter Ad Spending Declines 2%

Automakers Lead the Way in Cutting Back Media Dollars

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NEW YORK ( -- Ad spending fell 2% in the third quarter of this year despite all the advertising related to the elections and the Olympics, TNS Media Intelligence reported today. The remarkable decline follows a second-quarter decline of 3.7%, the sharpest quarterly drop in measured ad spending since 2001. Ad spending in the first three quarters of the year declined 1.7% from the first three quarters of last year.

"Media ad spending, which began tiptoeing into negative territory in early 2007, has crossed an inflection point in the past six months as the economic downturn has become more widespread," said Jon Swallen, TNS's senior VP-research. "Preliminary data from the fourth quarter indicate a further slackening of the overall advertising budget."

'Hard decisions' ahead
Dean DeBiase, CEO of TNS, said the advertising and media industries are facing more bad times. "Undoubtedly these industries will have to make some hard decisions in the coming months, decisions that perhaps had been deferred during periods of growth," he said. He noted the opportunity to create leaner operations, but that will be small comfort to most people in the business these days.

As you'd expect, domestic auto slashed its spending by the largest margin of any category of advertisers: 18.9%, or about $959 million. Imports cut back too, but a more modest 7.4%. Overall auto spending dove 12.7%, or $1.4 billion, in the third quarter alone.

Less alarming declines showed up in categories including telecom, which slid 5.2%; retailers excluding home-furnishings, appliance and department stores, which fell 4.8%; and personal-care products, which dropped 3%.

Real, live gains appeared in the convulsing financial-services sector, which increased spending 0.8% as it tried to explain itself to consumers and regulators.

Restaurants' ad spending grew 6.1%, food and candy ad spending rose 6%, and travel and tourism spending added 1.9%.

Top advertisers
The top 10 advertisers' ad spending dipped only a slight 0.2% compared with the 2.1% decline across the top 50 advertisers. Longtime leader Procter & Gamble sliced 5.9% from its budget but is no danger of losing the top spot to No. 2 Verizon, despite its 12.8% spending increase.

General Motors, the only automaker still in the top 10, bucked the industry trend and aggressively increased ad spending 15.7% as it shifted efforts toward passenger cars and away from light trucks.

General Electric and News Corp. also posted double-digit gains, though Time Warner and Walt Disney cut their spending.

Internet spending is still growing. Display-ad spending on the web rose 7% in the third quarter, according to TNS, which does not track keyword search buys.

But the other golden child, out-of-home advertising such as billboards and airport displays, ended a six-year growth spurt with a 0.5% slip.

Traditional media a mixed bag
The Olympics did its job for network TV, turning a six-month loss into a nine-month gain with a 3% third-quarter jump. Cable TV fared better still, adding 3.7% to its results from the third quarter of 2007. National syndication shone with a 9% leap, while Spanish-language TV held flat with a 0.3% increase.

Magazine ad spending dropped 3.8% for consumer magazines, 6.5% for local titles and 6.9% for business-to-business books. Sunday magazines held their ground, turning in a 0.3% bump, but Spanish-language magazines were the only ones to shine, posting a 4.9% increase.

Spanish-language newspapers, on the other hand, fell a crushing 12.7% in the third quarter, compared with an 8.9% decline in ad revenue for national English-language papers and a 10.2% plunge for local papers.

Radio lost 8.8%, including an 11.1% fall for national spot radio.

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