US adspend falls as major players cut back

18 March 2010

NEW YORK: The US advertising market posted a double-digit contraction in revenues last year, as major players like Procter & Gamble and Verizon Communications reined in their expenditure.

According to Kantar Media, the research firm, adspend levels fell by 12.3% on an annual basis in 2009, to $125.3 billion (€91.6bn; £82.0bn), although this decline slowed to just 6% in the final quarter.

Within this, television registered a decrease of 9.5%, with network, cable, spot, Spanish-language and national syndicated TV all recording drop offs year-on-year.

Print media found conditions even more adverse, with newspapers down by 19.7%, and magazines by 17.4%, over the same timeframe.

Radio ad sales tumbled by 20.3%, while outdoor slid by 13.2%, although, as with all the other channels assessed, the rate of decline moderated over the October-to-December period.

The top ten advertisers spent some $16.6bn in measured media last year, a figure that was just 0.9% lower than in 2008, Kantar Media reported.

However, the top 50 marketers, a group which was responsible for a third of all expenditure, reduced their collective outlay by a more substantial 5.1%, to $42.4bn in all.

Procter & Gamble, the FMCG giant, boasted the largest company total, on $2.71bn, but slashed its budget by 15.6% against the previous year.

Verizon Communications, in second, cut back by 6.9%, to $2.23bn, although General Motors, in third, actually increased its investment by 1.3%, to $2.20bn.

AT&T trimmed its spending by 4.1% to $1.9bn, while Pfizer, which boosted the resources dedicated to advertising by 32.7%, to $1.40bn, completed the list of the five biggest advertisers.

Elsewhere in the top ten, Sprint Nextel heightened the funding behind this area of its operations by 29.9%, to $1.22bn, with Wal-Mart up by 35.4%, to $1.17bn.

The automotive industry headed the category charts, despite delivering a decrease of 23.4%, to just under $11bn, with telecoms, in second, improving by 1.6%, to $8.61bn.

Financial services, in third, was off by 18.3%, to $7.82bn, while food and confectionery, growing by 3.1% to $6.26bn, and pharma, jumping 3.9% to $4.75bn, were the only other major segments to generate upticks.

"The advertising recession began to ease in the final two months of 2009 and preliminary figures from the first quarter of 2010 … indicate many sectors are experiencing growth," said Jon Swallen, svp, research at Kantar Media.

"Given the restraint in consumer spending, it appears marketers have more confidence right now than their customers."

"As we get deeper into 2010, the pace of consumer activity will be a key determinant of the strength and durability of the advertising recovery."

Looking to branded entertainment in Q4, an average hour of prime time network TV broadcasting yielded eight minutes of "brand appearances" and 14 minutes of network commercial messages, Kantar added.

These totals were higher for "unscripted programmes" like reality shows, as well as on late night slots, when they reached 12 minutes of brand appearances, and almost 16 minutes of network messages.

The top five brands ranked by the number of brand appearances were Yamaha Music Equipment, 24 Hour Fitness Center, Dell, Ford and Bud Light.

Data sourced from Kantar Media; additional content by Warc staff