Anemic Ad Spending . . .

Stock Asylum Staff Report
June 12, 2007

Fresh on the heels of a first quarter report indicating a slow start for ad spending this year, TNS Media Intelligence has sharply reduced its prediction for total 2007 ad expenditures in the United States.

The company that closely watches advertising trends now suggests U.S. ad spending will grow just 1.7 percent this year to $152.3 billion.

That figure was considerably lower than the company's previous forecast of 2.6 percent growth. The reduction could translate into less revenue for creatives and image suppliers, including stock photography distributors.

"The advertising market has moved into a slower track than we thought possible just six months ago," said TNS Media Intelligence President and CEO Steven J. Fredericks in a prepared statement on this date. He said the company still expects the overall pace of ad spending to pick up in the second half of the year.

"However, it still appears that total measured expenditures will post their smallest annual gain since the 2001 advertising recession as marketers continue to incrementally scale back their allocations to off-line media in favor of less expensive digital alternatives,” he noted.

The company predicted that spending during the first half of this year would be up just 1.2 percent over the same period last year. A jump of 2.3 percent is expected during the second half of the year, the company said.

Display advertising on the internet will be a bright spot, according to TNS. Such advertising should grow 16 percent on a year-over-year basis. But, the company also predicted advertising declines in radio, business-to-business magazines, newspapers and spot TV.

There is apparently much room for growth in internet ad spending. TNS recently said that internet advertising, not including paid search, was $2.7 million during the first quarter of 2007. By comparison, all TV advertising accounted for nearly $15.6 billion, according to the company.

A report by JupiterResearch, also issued on this date, indicted that online users now spend as much time online as they spend watching television. The report also said that online users under 35 years of age spend more time online than in front of the TV.

"Neither relatively better targeting nor the increasing availability of branding-friendly rich media and video inventory have led to any demonstrable online cannibalization of TV spending. But that's partly because over half of users' time online is spent in communications, like e-mail and instant messaging," said David Card, vice president and senior analyst at JupiterResearch.

JupiterResearch said that advertisers have to be careful about how they advertise in social media. "Brand advertisers should rely on sponsorships, widgets, or branded microsites within the networks," the company said. It added that intrusive advertising will not be accepted at such venues.

Earlier this month, TNS said U.S. ad spending actually fell 0.3 percent during the first three month of 2007 when compared to the same period in 2006.

The TNS web site is at: http://www.tns-mi.com.

JupiterResearch is at: http://www.jupiterresearch.com.