Ad Spending Heads Into Tepid Recovery

Outlook Bright for Digital, PR, Events; Marketers Move Into Merger Mode to Fuel Growth

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Key stats and rankings from Ad Age DataCenter reports
CHICAGO ( -- Depending on which media forecast you look at, U.S. advertising spending in 2009 declined for the second or third year in a row. And U.S. ad spending in 2010 will either show a meager gain or fall a bit more.

But the bottom line is brutally clear: 2009 saw the sharpest percentage decline in ad spending since the Great Depression.

U.S. measured-media ad spending plunged 14.7% in the first nine months of 2009, reflecting a freefall in local advertising (such as auto dealer ads), according to WPP's TNS Media Intelligence. TNS said the nation's 100 largest advertisers cut measured-media spending by 7.9% in the first three quarters.

Full-year 2009 will mark only the fifth spending drop since Ad Age began ranking the 100 Leading National Advertisers in 1956. (LNA spending fell 2.7% in 2008, 1.3% in 2001, 3.9% in 1991 and 0.4% in 1970, all recession years.)

By most accounts, this recession is over, but advertising is likely to see only a modest recovery. Interpublic Group of Cos.' Magna forecasts that media firms' U.S. ad revenue will be lower in 2015 than in 2000.

Magna chart
Core media advertising (TV, search/internet/digital, newspapers, magazines, radio, outdoor, cinema). Source: Magna Global (December 2009).

There are positive signs. Magna expects high-single-digit (percent) annual growth in U.S. online advertising from 2010 through 2015. Marketing services is also a bright spot; ZenithOptimedia, part of Publicis Groupe, forecasts strong growth over the next few years in such areas as event sponsorship and public relations.

The year just ended brought stunning bankruptcies of General Motors and Chrysler. But top-tier marketers in other industries jumped back into merger mode as financial markets thawed. Among the major deals of 2009:

  • Pfizer bought Wyeth and Merck & Co. acquired Schering-Plough as big pharma got bigger.
  • Comcast Corp. agreed to buy 51% of NBC Universal.
  • Time Warner spun off Time Warner Cable and AOL.
  • Walt Disney Co. bought Marvel Entertainment.
  • Kraft Foods made an unsolicited bid for candy maker Cadbury.
Media Advertising chart
Includes TV, radio, newspaper, magazine, internet, out of home. Magna and Zenith include cinema. TNS internet spending excludes search and broadband video. TNS '09 is for first 9 months. For future-year forecasts (2010 and beyond), Group M and ZenithOptimedia assume constant foreign-exchange rates and employ inflation predictions from independent sources; Magna's figures are based on its forecast of media firms' ad revenues in nominal dollars, including the effects of changes in exchange rates and inflation. Source: December 2009 media-agency forecasts; TNS Media Intelligence.

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