U.S. Ad Spend Increased 1.5% In the First Nine Months of 2011
Ad Projections
December 2011 – Total U.S. advertising expenditures in the first nine months of 2011 increased 1.5 percent from a year ago and finished the period at $104.7 billion, according to data from Kantar Media, a provider of strategic advertising and marketing information. Spending growth slowed during the third quarter and was up 0.4 percent compared to last year.
“The cautious optimism for the advertising market at the beginning of 2011 has been replaced by the statistical evidence of progressively slowing growth rates,” said Jon Swallen, SVP Research at Kantar Media North America. “From +4.1 percent in the first quarter, to +2.8 percent in the second quarter and now a barely palpable +0.4 percent for the July to September period. During Q3, an expanding number of the largest marketers became even more conservative with their ad budgets and these reductions have neutralized the healthy spending growth occurring among mid-sized advertisers."
Measured Ad Spending By Media
INTERNET - Within the Internet sector, display advertising expenditures jumped 15.8 percent during July-September and the gains were broadly distributed across top spending categories. However, measured investments in paid search declined 14.4 percent in Q3 on continuing reductions from insurance companies, legal services and medical care providers. For the first nine months of 2011, display spending increased 10.1 percent while paid search fell 2.1 percent
TELEVISION - Most forms of television had spending gains in the third quarter. Expenditures on cable networks increased 6.5 percent during Q3 as higher demand from Direct Response advertisers was offset by curtailed spending from auto manufacturers and restaurants. January-September outlays on cable TV rose 9.9 percent. Network TV registered its first quarterly gain of the year as Q3 expenditures inched ahead 0.2 percent on higher budgets from movie studios and consumer package goods marketers. Year-to-date expenditures were down 5.7 percent, primarily from the loss of marquee college football and basketball programming that moved to cable networks in the first quarter of 2011. Ad spending in Spanish Language Television jumped 18.0 percent during Q3 and Syndication TV was up 14.8 percent in the period. The only TV segment to lose ground was Spot TV, where expenditures decreased 5.7 percent during July-September and were down 2.7 percent for the nine months.
OUTDOOR - Outdoor spending slowed during the third quarter but still registered gains of 3.2 percent for July-September and 8.6 percent for the nine months. Local service businesses, restaurants and education institutes continued to direct more money into the medium.
MAGAZINES - After six months of modest growth, Consumer Magazine ad expenditures reversed course in Q3 and dropped 1.4 percent. Stable demand from the personal care, apparel, prescription drug and direct response categories was more than offset by reductions from food companies and auto manufacturers. Year-to-date spending for the medium has grown 2.2 percent
NEWSPAPERS - Local Newspapers, despite robust budgets from local auto dealers and an uptick in financial advertising, posted a 4.4 percent spending decline in Q3 and were down 3.9 percent year-to-date.
RADIO - The pace of spending in Radio media remained soft but steady. Local Radio expenditures were up 2.0 percent in Q3 and have risen 2.2 percent year-to-date. National Spot Radio fell 2.3 percent in July-September and was off 1.9 percent for the first nine months of the year.
Source: Kantar Media
Measured Ad Spending By Category
Expenditures for the ten largest categories grew 3.1 percent in the first nine months of 2011, to $59,523.6 million. For the July-September quarter, the aggregate increase was 1.8 percent and quarterly growth rates for seven of the ten categories trailed their year-to-date average, further evidence of the slowdown in ad spending.
AUTOMOTIVE - Automotive was the top category with $9,908.4 million of spending during the nine month period, up 7.0 percent. However, the bulk of the gain came early in the year and from April through September automotive budgets have grown just 1 percent. The March earthquake and tsunami in Japan, coupled with monsoon flooding in Thailand, has had a ripple effect on U.S. auto advertising. These natural disasters disrupted production at Toyota and Honda and led to reduced advertising of their vehicles in the face of inventory shortages. With a tightened industry supply of new vehicles and less competition for sales, other manufacturers seized an opportunity to improve profit margins by scaling back on consumer incentives and reducing media budgets.
LOCAL - Local Services was the second largest category and tallied $7,144.2 million of media spending for the nine months. Year-to-date growth was up 7.2 percent and Q3 surpassed this level with an increase of 7.8 percent. This performance is consistent with the category’s weighting towards mid-sized advertisers, a segment that has been spending robustly throughout the year.
DIRECT RESPONSE - Category expenditures for Direct Response products advanced more than 10 percent during the July-September quarter and reached $4,698.5 million for the full nine months, up 3.9 percent versus a year ago. The Q3 gains suggest lower demand from full-price advertisers for the non-premium and run-of-station inventory which are the staple of DR marketers.
CPG - After an extended run-up, expenditure growth rates for consumer package goods categories have been retreating. For the January-September period, Food & Candy was down 2.6 percent to $4,838.1 million while ad spending for Personal Care Products slowed sharply in Q3 but still finished the nine months up 7.6 percent to $4,787.3 million.
TELECOMMUNICATIONS - The Telecom category continues to lose ground. Year-to date spending declined 4.9 percent to $6,405.1 million and Q3 expenditures tumbled 6.1 percent. The ongoing weakness within the wireless segment has now taken root among satellite TV operators, previously a reliable source of ad spending growth.
Source: Kantar press release, Kantar Media reports U.S. advertising expenditures increased 1.5% in the first nine months of 2011, December 19, 2011.
