Ad Spending Growth Declined in the Second Quarter

P&G is among the marketers spending significantly less, Kantar Media reports

Ad spending growth in the U.S. slowed significantly in the second quarter, according to a report from Kantar Media.

According to the report, ad spending for the quarter increased by just 0.7 percent, to $35.6 billion, compared with the 5.7 percent increase in Q1. During the first six months of 2014, ad spending has grown 3.1 percent.

"The slow growth rate of ad spending in Q2 is payback for the surfeit of money in Q1 that was pulled forward to fund Olympics budgets," explained Jon Swallen, North American chief research officer at Kantar Media, in a statement. "Olympics advertisers reduced their year-over-year Q2 spending by more than 4 percent while non-Olympics advertisers posted a 2 percent increase. The latter is more indicative of core ad market performance at the midyear point."

The report also revealed sharp decline in ad spending in the first half of the year by Procter & Gamble, the world's biggest ad spender. The company's spending was down more than 17 percent compared to the same period last year. Procter & Gamble slashed spending by almost a third in Q2, after a small decline in the first quarter. That spending drop came against an "atypically high volume of year-ago spending," Kantar noted.

Spending by AT&T and L'Oréal also fell, each by 9 percent. In contrast, General Motors and Pfizer raised ad spending by almost 23 percent and 25 percent, respectively, in the first half, compared to the same period last year. Pfizer, which showed the sharpest increase in spending, "has been putting more marketing resources behind top-selling Rx brands that are still under patent protection and don’t yet face competition from cheaper generic alternatives," Kantar said.

GM, meanwhile, was among three automakers on Kantar's list of the top 10 spending advertisers of the first six months, along with Toyota (whose spending grew by more than 5 percent) and Fiat (up more than 14 percent).

Despite spending increases by the three carmakers, automotive spending overall declined 0.5 percent in the first half. Personal care products saw the sharpest decrease in the top 10 categories, with spending down by more than 4 percent. Insurance, by contrast, experienced the largest increase, with spending growing by nearly 17 percent. Other categories with sharp increases included direct response (up about 9 percent) and local services (up 6 percent).

Collectively, spending in the top 10 categories grew almost 3 percent to $43.66 billion in the first half of the year, according to Kantar.