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Ad Spending Up Slightly During 2006

Mar 26, 2007  •  Post A Comment

Advertising spending rose 4.6 percent during 2006, with the Internet chalking up the biggest gains.

Some segments of the television business did well, too, notably spot TV in the top 100 markets, helped by record-setting amounts of political advertising during a hotly contested off-year political campaign, as well as national Spanish-language TV, reflecting the continuing growth of the Hispanic market.

Money apparently didn’t filter all the way down to spot TV in markets 101 through 210. Ad spending on stations in those relatively small areas declined for the year.

“Total U.S. ad spending continues to grow, with the Internet, Spanish-language and outdoor leading the way,” said Brian Lane, senior VP of client strategy and product development management for Nielsen Monitor-Plus, the advertising intelligence service of the Nielsen Company, which released the figures last week.

While the Internet in some ways seems to be taking money away from some traditional media, outdoor advertising “is showing renewed strength due in part to advances in digital technology,” such as digital billboards, Mr. Lane said.

Among the television categories tracked by Nielsen Monitor-Plus, large-market spot TV showed the biggest increase with a 9.1 percent gain. Next was Spanish-language national TV with an 8.1 percent bump. Network TV was up 4.2 percent, which topped national cable, up just 1.8 percent. Spot TV in markets 101 through 210 was down 0.9 percent.

Among other measured media, spending on the Internet was up 35 percent. That figure does not include pre-roll in-stream Internet video ads, which are becoming increasingly popular. Outdoor showed an 8.1 percent increase. Spending on national Sunday supplements was up 4.6 percent, national magazines were up 3.9 percent, local magazines gained 3.3 percent, national newspaper advertising rose 2.9 percent and spot radio edged up 0.7 percent.

The other media showed declines, with spending on business-to-business magazines down 0.2 percent, coupons off 0.6 percent, network radio dropping 2.4 percent and local newspaper ads losing 3.6 percent.

The Nielsen Monitor-Plus report also looked at the activities of some of the top advertisers, noting several cut back on measured media during 2006.

Johnson & Johnson, though still the seventh-largest spender, spent 20.4 percent less on measured media in 2006 than it had in 2005. The company made a bit of a splash last May when it said it would not participate in the upfront market until it was ready during the summer.

Also reducing ad spending were General Motors, down 16 percent; DaimlerChrysler, down 6.1 percent; and Time Warner, down 6 percent.

On the other hand, AT&T, the No. 3 spender, increased its outlays by 44.4 percent as it underwent name changes and battled in the competitive cell phone market. Another telecommunications company, Verizon Communications, boosted spending by 16.2 percent. Toyota’s ad spending rose 14.2 percent.

Overall, the top 10 advertisers increased spending by just 0.5 percent.

Among the top spending categories, credit card services showed the biggest decline on a percentage basis, with spending dropping $136.6 million, or 6.9 percent. The automakers as a group cut spending 1.4 percent, or $197.4 million. Auto dealers sliced $176.7 million, or 3.5 percent, from the previous year’s outlays.

Pharmaceutical spending was up 14.9 percent, adding $718.9 million in revenue to media coffers. Wireless phone companies spent 10.5 percent more, an increase of $36.3 million, and spending by department stores rose by $165.9 million, or 4.1 percent.