Major Players Cut Q1 Ad Spends

NEW YORK The nation’s largest advertisers, including Procter & Gamble, AT&T and General Motors, pared their advertising budgets going into 2007, sending total Q1 ad expenditures down 0.3 percent to $34.93 billion, according to data released today by TNS Media Intelligence.

Even when factoring out last year’s surge due to events such as the Winter Olympics, “it is apparent that core growth rates have slowed further from last year’s lackluster levels,” said Steven Fredericks, president and CEO of TNS.

Only six of the 19 media tracked by TNS showed gains in the first quarter, including Internet display advertising (up 16.7 percent to $2.7 billion), cable TV (up 6.3 percent to $3.8 billion), Spanish-language TV (up 3.7 percent to $985.5 million), consumer magazines (up 7.1 percent to $5.1 billion), Spanish-language magazines (up 14.3 percent to $35.6 million) and outdoor (up 2.4 percent to $882.2 million).

“We’ve seen better times,” said John Swallen, svp and director of research at TNS, which will issue a pared-down forecast next week. Originally, TNS forecast that 2007 ad spending would end the year up 2.6 percent.

For the first time, the automotive and telecommunications categories, usually at the top of the ranks, were replaced by financial services in the No. 1 spot. “It’s not that financial companies increased budgets a whole lot; it’s that they watched everyone else retreat in the rearview mirror,” Swallen said.

Automotive dollars have shrunk considerably, down 7 percent. In the first quarter, domestic automakers cut $200 million from ad budgets, while imports eliminated $80 million. Over the past 12 months, GM alone has reduced its ad budget by $900 million, from $2.9 billion to $2 billion. “That’s as much as Honda or Nissan spend on advertising in a year, so that’s a huge impact on the marketplace,” Swallen said.

Although the telecom category declined 7.6 percent, AT&T, which last year launched a huge rebranding campaign, drove most of that. “The declines are a timing effect; the core levels remain strong,” said Swallen. Both Verizon and Sprint increased spending by about 6 percent and 7.8 percent, respectively.

Television was hurt the most by disappearing auto dollars and the absence of the Olympics. Network TV dropped 7.2 percent to $6.1 billion; spot TV declined 4 percent to $3.7 billion; and syndication TV was down about 6 percent to $986.8 million. In contrast, cable did well on the strength of niche and special interest cable networks.

Newspapers and radio continue to bleed share points as advertisers migrate dollars to the Internet. While the Internet gained share, up 7.7 percent from 6.6 percent, newspapers’ share of dollars dropped to 18 percent from 18.8 percent. Radio’s share, also hit hard by less automotive spending, dropped to 6.6 percent from 6.7 percent.

“It’s a steady erosion in newspaper advertising. They’re losing money from print faster than they can replace it with the Web sites. For every dollar lost in print, newspapers are only getting 30 cents back from their Web sites,” Swallen said.

Magazines were one of the few media to gain share, up to 19.2 percent from 18.3 percent. “There was a 1 percent increase in page counts for magazines and rate card price hikes,” Swallen explained.