Ad spending declined in Q2

Top 10 advertisers cut back 3% in weak economy

NEW YORK -- U.S. advertising spending dropped into recessionary territory in the second quarter amid economic woes, recording the biggest drop since the last recession in 2001.

Research firm TNS Media Intelligence on Wednesday reported a 3.7% decline for the second quarter, with all media categories seeing weaker momentum than in the first quarter. That left overall U.S. ad spending for the first half of the year down 1.6%.

"Advertising expenditures started to contract in March, well before the September turbulence on Wall Street renewed concerns about the health of the economy and possible collateral damage to the ad market," said Jon Swallen, senior vp of research at TNS. "Sustained improvement will most likely depend on a turnaround in consumer spending that rejuvenates corporate profits and encourages marketers to expand their advertising efforts."

For the second half of 2008, the firm says, ad spending figures will be helped by the Beijing Olympics and the elections.

However, observers increasingly worry that the financial crisis will drag down ad spending further. Auto, retail and other categories have already seen spending declines.

Auto spending was down 11.2% for the first six months of 2008, according to TNS. Financial services spending remained unchanged before the recent Wall Street crisis.

For the first half of the year, cable TV was one of the few growth sectors in the media space. Ad spending here rose 3.1%. Syndication TV even saw a 10.2% increase. However, network TV spending fell 2.4% and spot TV was down 4.4%.

Internet spending remains a strong part of the ad business even though momentum has slowed to leave the first half of the year up 8%, TNS said.

Newspapers and radio showed the sharpest six-month declines with 7.4% and 6.5%, respectively. Network radio brought in a 3.4% gain though.

The top 10 advertisers cut back spending 3%, as such giants as Procter & Gamble and Johnson & Johnson reduced their budgets in a weak economy, according to the TNS report.

Media giants took different spending strategies. News Corp. raised its ad spending 10.6% year-over-year for the first half, becoming the fifth-largest advertiser in the U.S. with $728.1 million and overtaking Time Warner, which spent 9.2% less on advertising, while Disney cut back by 8.8%.