Advertising revenues return to growth in US

27 May 2010

NEW YORK: Adspend levels in the US increased for the first time in two years during the opening quarter of 2010, according to figures from Kantar Media.

The research firm reported that advertising revenues in the country climbed by 5.1% in Q1 this year to reach $31.3bn (€25.4bn; £21.7bn).

This marked the first year-on-year expansion since the same period in 2008, and was also the largest such uptick since 2006.

"With the economy turning from recession towards growth, marketers appear to be more confident about a pickup in consumer activity and have increased ad budgets to support their brands," Jon Swallen, svp, research at Kantar Media, said.

"While the rising tide has thus far benefitted some media sectors more than others, Q1 spending hikes were broadly distributed across advertisers and categories and that's an encouraging signal."

Television registered an improvement of 10.5%, including gains of 22% for spot TV, 11.6% for network TV and 8.2% for cable stations.

After a three year slump, radio also saw totals leap by 7.4%, a process mainly driven by a 19% expansion in national spot advertising.

However, national newspapers were off by 3.7%, while magazines experienced a decline of 3.2% and outdoor posted a modest loss of 0.4%.

Looking to the web, display advertising – the only online format assessed by Kantar Media – saw demand rise by 5% year-on-year.

Procter & Gamble, the FMCG giant, boosted its measured media outlay by 17.7% to $772.6m, with AT&T heightening its budget by 26.7% to $576.4m.

General Motors' investment in communications similarly jumped by 28.5% to $533.7m, while Pfizer's expenditure in this area swelled by 46.2% to $396.5m.

This left Verizon as the only member of the top five advertisers to have cut back in Q1, as the telecoms specialist reduced the support behind its brands by 9.1% to $517.2m.

Elsewhere in the top ten, Johnson & Johnson and Walt Disney both reined in their expenditure by 11.8%, to $344.1m and $267.6m respectively.

In contrast, News Corp's advertising expenses rose by 7.8% to $366.8m, with Time Warner up by 14.7% to $304.3m and General Electric by 1.3% to $264.6m.

As a whole, this group of brand owners directed $10.6bn to advertising in the first quarter of 2010, some 10.6% more than the previous year.

The top 100 companies on this measure collectively generated $15bn in revenues for media owners, a lift of 11% in the same timeframe.

By category, the automotive, telecoms and financial services sectors all recorded double-digit increases in their expenditure, with confectionary and personal care firms also up by over 5%.

Less positively, the "long tail" of businesses outside the top 1000 advertisers actually delivered a contraction of 1.1%, Kantar said.

Data sourced from Kantar Media; additional content by Warc staff