Advertising spend down by 9% in US last year

26 February 2010

NEW YORK: Advertising expenditure levels fell by 9% in the US last year, to $117 billion (€86.8bn; £76.3bn), according to The Nielsen Company.

The research firm reported that the world's biggest advertising market has now witnessed six successive quarterly decreases in overall revenues.

More positively, it suggested the rate of decline is visibly "slowing down", with Q2 2009 delivering a contraction of 15.4%, compared with a dip of 11.5% in Q3, and just 2% in Q4.

Terrie Brennan, senior vice president, new business development at Nielsen, said the closing three months of last year had thus "helped soften" the scale of the crisis facing the industry.

"In fact, most of the top advertisers showed increased spending late in the year. These are encouraging signs for an ad market that's still trying to stop the bleeding," she added.

By medium, Spanish-language cable television recorded an uptick of 32.2% on an annual basis, with cable TV improving by 14.8%.

Coupons featured in "free-standing inserts" in publications like local newspapers also enjoyed an increase of 11.5% year-on-year, as brands placed greater emphasis on promotions.

The internet generated marginal growth, of 0.1%, but fared considerably better than most other forms of major media.

Network television was off by 9.9%, as was syndicated TV, by an even more substantial 14.7%, when compared with the previous 12 months.

The top 100 spot TV advertisers also reined in their outlay by 16.1%, with their counterparts in the group from 101 to 210 also down by 14.2%.

Conditions were equally challenging for print media, with national newspapers registering a 13.7% slide in ad sales, a total that reached 10.4% for local news titles, and 19.3% for national magazines.

Outdoor also experienced an income reduction of 11.2%, a figure that stood for 9.7% for network radio, and 8.7% for spot radio.

In terms of major categories, general automotive and local dealerships both slashed their budgets by 23%, to $8.0bn and $3.2bn respectively.

Wireless telephone services cut back by 8.2%, as did motion pictures, by 1.3%, leaving both segments on around $3.4bn.

Companies in the investment services sector invested 14% less than in 2008, on $1.3bn, with more than 1,000 advertisers from this industry paring back their activity to zero in this period.

By contrast, web-based properties boosted the resources directed to communications by 32%, to $1.1bn, with Hulu, the video-on-demand service, and Bing, Microsoft's search engine, among the sites driving this trend.

Pharma brands also spent 1.8% more, on $4.5bn, with fast-food chains up by 1.3%, to $4.1bn, and department stores by 2.8%, to the same amount.

Data sourced from The Nielsen Company; additional content by Warc staff