Ad Spending Improved

According to Stuart Elliot writing in the New York Times, the recovery in advertising spending continued in the fourth quarter last year, according to a report that is to be released on Thursday morning, resulting in a solid full-year gain compared with the results of 2009.  Ad spending in the United States in the fourth quarter increased 7 percent from the same period of 2009, said Kantar Media, a unit of WPP that tracks marketing activity in major media. That, added to the results from the first three quarters of 2010, combined for a total increase of 6.5 percent compared with 2009.

In 2009, ad spending fell 12.3 percent compared with 2008 as the poor economy led many marketers to cut back their spending for advertising.  The gain of 7 percent for the fourth quarter was an improvement from the increase registered in the first three quarters of 2010 compared with the same period the previous year, which was 6.4 percent.  The fourth-quarter increase was, however, smaller than the gain in the third quarter of 2010 compared with the same period of 2009, which was 8.7 percent — the largest quarterly increase measured by Kantar since the fourth quarter of 2004.

The gain for the fourth quarter was the fourth quarter in a row that ad spending rose compared with the same quarter the previous year. That also means ad spending rose in all four quarters of 2010 compared with the same quarters of 2009.  The rising tide has not lifted all the boats, contrary to the old saying.  “While television media have recouped their losses from the 2009 advertising downturn,” said Jon Swallen, senior vice president for research at the Kantar Media North America unit of Kantar Media, “several other large segments are still 15 to 20 percent below their 2008 peak.”

Those include various types of print media like newspapers and magazines. For instance, Mr. Swallen said, ad spending in local newspapers has now declined for 21 quarters in a row.  Television media enjoyed the biggest increases in 2010, according to the Kantar Media, gaining 10.3 percent compared with 2009. Internet display ads were close behind, up 9.9 percent, followed by outdoor media, up 9.6 percent; radio media, up 7.6 percent; free-standing coupon inserts, up 5.4 percent; and magazine media, up 2.9 percent.

Newspaper media was the sole category to suffer a decline last year compared with 2009, of 3.5 percent.  The reason was that gains in ad spending in national newspapers, up 2.7 percent, and Spanish-language newspapers, up 2 percent, could not overcome the decline in ad spending in local newspapers, which was 4.6 percent.  In looking at types of advertising, there were increases in 2010 in 8 of the 10 biggest categories. The exceptions were direct response ads, down 5.8 percent from 2009, and pharmaceuticals, down 8.2 percent from 2009.  The category with the largest gain was, coincidentally, the largest category, automotive advertising, which soared 19.8 percent compared with 2009. Ads from auto dealers climbed 26.3 percent and ads from the automakers rose 16.4 percent.

Other robust gains came in categories like personal-care products, up 11.7 percent from 2009; miscellaneous retail, up 9.3 percent; and food and candy, up 7.1 percent.  Turning to the marketers that did all the spending, Procter & Gamble led the list of big spenders for the eighth year in a row, at $3.1 billion, up a strong 17.7 percent from 2009.Of the Top 10 spenders, 5 spent more than in 2009, with increases ranging from 10.5 percent, for the News Corporation, to 30.6 percent, for L’Oreal.  Of the five that spent less last year than the year before, the declines ranged from 0.5 percent, for Time Warner, to 15.2 percent, for Verizon Communications.  The top 10 largest spenders, in descending order after Procter & Gamble, were: General Motors, AT&T, Verizon, the News Corporation, Pfizer, Time Warner, Johnson & Johnson, Ford Motor and L’Oreal.

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