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Online Display Spend Rises 8.2%; Ad Spend at Large Falls 14.2%

Total measured ad expenditures in the first quarter of 2009 plunged 14.2% vs. a year ago, to $30.18 billion, according to data released by TNS Media Intelligence (via MarketingCharts).

This plunge followed a 9.2% decline in Q408 as the advertising recession accelerated into the new year.

Ad Spend by Medium

Local media suffered most, with aggregate expenditures sinking 25.4% in Q109. The rate of decline was similar across Spot TV (-27.5%), Local Newspapers (-25.1%) and Local Radio (-26.8%). Each of these segments was severely affected by deep spending cutbacks in core categories such as automotive, retail and local services.

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For national media, combined ad spending fell 8.5% vs. a year ago. Within this segment, performance was sharply defined along the lines of print vs. TV vs. online.National Newspapers (-28.5%), B2B Magazines (-25.5%), Consumer Magazines (-19.2%) and other print media were clustered together in terms of their percentage decreases as their revenue declines were driven by fewer ad pages, according to the data.

Network TV (-4.2%), Cable TV (-2.7%) and Syndication (+0.2%) occupied a middle tier of losses and each of these saw business improve slightly at the end of the quarter, paced by motion-picture and restaurant category spending.

The only area that reflected significant growth was internet display expenditure, which increased 8.2% as telecom, travel and local retail advertisers expanded their online marketing programs.

Ad Spending by Advertiser

The top 10 advertisers in Q109 spent a combined total of $4,019.5 million, a 5.7% decline from last year. Across the top 100 companies - a more diversified group of marketers representing nearly one-half of total ad expenditures - spending fell by 8.1%. The sharpest reductions occurred further down the rankings among the long tail of small advertisers who collectively account for the last one-fifth of total industry spending, said TNS.

Media outlays among this fragmented group fell 22.3%, a reflection of their sensitivity to economic and business conditions.

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Procter & Gamble, despite slashing ad expenditures 17.8%, remained the country's largest advertiser with $674.1 million in spending. The company cut TV allocations by nearly 30% across its brand portfolio, while leaving magazine budgets untouched.Johnson & Johnson was the only other packaged goods marketer in the top 10, and it increased total ad expenditures by 28.9%, to $397.2 million, its highest level of quarterly spending in two years.

Among the wireless telecommunication providers, Sprint Nextel aggressively hiked spending by 30.3%, to $317.7 million, primarily to promote a new bundled value plan. Verizon Communications raised expenditures by 3.1% to $577.1 million while rival AT&T registered a decline of 1.2%, to $459.4 million.

General Motors racked up $424.2 million of ad expenditures in the quarter, a 19.1% drop from a year ago but a smaller rate of decrease than most of its competitors.

Ad Spend by Category

The Top 10 advertising categories in Q109 spent a combined $16,735.6 million, down 13.6% vs. a year ago. The aggregate drop was skewed by the reduction in auto category expenditures, which nosedived 28.4% to $2,309.0 million.

Auto manufacturer spending was off 15.2% and dealer advertising was down a stunning 48.9%, paralleling a 38% decline in new-vehicle sales during the period.

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Only two top categories registered spending increases. Telecom expenditures rose 3.0 %reached $2,078.1 million with gains occurring across major wireless, cable and satellite TV providers. Restaurant ad budgets were up 2.5% to $1,415.5 million, led by quick-service food establishments.

On the down side, Financial Services shed more than $400 million of spending and finished the quarter at $1,968.4 million, down 18.1%. Reductions were most prominent among loan products (-67.9%), credit cards (-41.0%) and retail banking (-20.7%). Other notable double-digit declines occurred among Local Services (-14.7%, to $1867.0 million), Direct Response (-17.4 % to $1,635.8 million) and Travel & Tourism (-14.3%, to $1,140.4 million).

"The ad market declined significantly in the first quarter, overtaken by a collapsing economy which prompted consumers and marketers alike to shut their wallets and conserve," said Jon Swallen, SVP of Research at TNS Media Intelligence.

"While there are hopeful signs of general economic indicators bottoming out, the advertising sector still appears to be lagging behind. Available data from second quarter shows ad expenditures tracking on a comparable plane to recent months."

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