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Signs Of Ad Spending Reversal Appearing

14 Apr 2010
Posted by Market and Main Media

Continuing the downward trend of the last six quarters, spending on advertising in the U.S. fell by 9% in 2009, bringing the total down to $117 billion for the year. However, there are small indications that things may be turning around. For example, the rate of decline is slowing down. “Fourth quarter ad spending was down just two percent year-over-year, and that helped soften the full-year decline,” said Terrie Brennan, senior VP for new business development at The Nielsen Company. Brennan added, “Most of the top advertisers showed increased spending late in the year. These are encouraging signs for an ad market that’s still trying to stop the bleeding.”

Based on the Nielsen Company’s data, the strongest performing media categories were Spanish language cable TV (with a 32.2% increase in ad spending from 2008 to 2009), cable TV (with a 14.8% increase) and the FSI coupon (which increased by 11.5%). The Internet was flat with a .1% increase. On the other end of the spectrum, the poorest performing media categories were the local Sunday supplement (which declined by almost half [44.9%] from 2008 to 2009), B2B (spending lost 32.7%) and local magazines (which lost 23.9% in the same time period).

Even print media is seeing some encouraging signs. Ad spending in national newspapers had plummeted by 21.6% during 2009’s first three quarters, but the fourth quarter showed only a 13.7% decrease from 2008. Local newspapers, not quite so hard hit as the national papers, lost only 10.4% in ad revenue for fourth quarter (down from 14% in the first three quarters).

Though the automotive product category (factory and dealer) spent the most at $8,039.1 million, this represented a significant decline (23.4%) from 2008. The only other product category with such a large decline was local auto dealerships (-23%).  Pharmaceuticals remained big spenders with a 1.8% increase over 2008 to $4,504.6 million. The only other two product categories of the Top 10 that showed increases from 2008 to 2009 in ad spending were QSRs (+1.3%) and department stores (+2.8%).

WHAT DOES IT MEAN TO ME?
As advertisers begin to invest again and all forms of media are seeing an uptick in demand, prices can be expected to rise. Though it’s early days in the potential turnaround, it is smart to start planning now for changes in advertising rates. To secure the most advantageous pricing, do your media buying well in advance.
RELATED
“Year End Ad Spend,” Nielsen News Release, 2/24/10 (see attached Article_5_Year End Ad Spend)

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