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Smallest Gain Since 2003 but Cable, Direct See Big Increases

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LOS ANGELES ( -- U.S. ad spending in the first quarter rose 4.4% to $33.5 billion compared with the same period in 2004, TNS Media Intelligence reported today.
Ad spending was up in the first quarter and continues to increase faster than the gross domestic product.

That was the smallest gain in measured-media spending since the end of 2003, though TNS noted spending continues to increase at a faster rate than gross domestic product, as it has in 10 of the last 11 quarters.

Cable takes share from broadcast
Estimated revenue for cable TV networks grew 18.2% to $3.5 billion, taking share from broadcast TV. Broadcast networks’ estimated ad revenue increased 3.8% to $5.8 billion, TNS said.

All media grew except for spot TV (down 4.8%) and network radio (down 3.2%).

However, the struggling medium of local newspapers managed only a 0.3% gain to $5.9 billion.

Internet spending up 8.2%
Consumer magazines’ estimated revenue increased by 9.5% to $4.7 billion. Internet advertising rose 8.2% to $1.9 billion.

Local magazines had the biggest percentage gain, up 26.2% to $104 million.

“It is clear that advertisers were fiscally more cautious in the first quarter of 2005, given mixed economic indicators and wavering consumer confidence,” TNS President-CEO Steven Fredericks said in a statement. “Traditional stalwart categories such as automobile, banking and retail department stores performed below market average, but those decreases were offset by increased spending by direct response and restaurants.”

Does not reflect actual revenue
TNS figures, based on rate cards, offer direction on year-over-year trends and share shifts, though the estimates aren’t intended to reflect actual revenue. For example, actual first-quarter revenue for ABC, CBS and NBC was $2.9 billion, according to data those TV networks gave to the Broadcast Cable Financial Management Association, a trade group. So actual revenue for those networks plus Fox, UPN, The WB and PAX was sure to come in below TNS’s broadcast network estimate of $5.8 billion.

Spending in the top 10 advertising categories rose 4.9% to $14.3 billion in the first quarter compared with the same time period a year earlier, TNS said. By dollar amount, domestic autos led all categories at $2.1 billion (up 8%), closely followed by non-domestic autos at $2 billion (down 5%).

Direct response
Direct response led all categories in growth, jumping 19.3% to $1.5 billion. Ad spending in the category of media and marketing services increased 12.6% to $1.1 billion, while restaurants rose 11.9% to $1.1 billion.

Spending in the top 10 categories for the first quarter, at $14.3 billion, accounted for 42.6% of total U.S. measured ad spending.

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