Ad Spending Seen as Cautious Through Year End

In the first quarter of this year, ad spending growth looked promising with a 2.6% increase noted by Kantar Media. But things changed in the second quarter. The overall growth rate has slowed though, for traditional media, TV continues to turn in a surprisingly strong performance.

The Kantar Media numbers show that while spending on TV rose 7.6% in the first quarter, the increase in the second quarter was only 4.4%. These growth rates are fascinating to consider since the TV audience dropped 1.7% at the end of last year and by another 1.8% earlier this year. Because TV is the “single most influential medium influencing consumer purchase decisions” marketers continue to spend in the format. This strategy is especially true for marketers seeking to reach 18–34 year-olds, college students, and Hispanic consumers. Because of the power of TV, analysts expect the channel to generate a compound annual growth rate of 6.7% through 2016 while the overall ad market’s CAGR will be about 5.9%.

The outlook is not so bright for print. Kantar reports that spending on print media continues to fall with a recorded drop of 3.1% for newspapers and 2.7% for magazines in the most recent quarter. The bright spot in the traditional print market is Spanish language where magazines have been able to increase their revenue by 8.9%. In addition, the free-standing insert channel continues to do well, capturing a 1.5% increase since the start of the year.

For other traditional formats, radio and outdoor are both showing increases. Industry watchers might assume that online is a growth channel all the time. But that’s not the case for online display which has seen investment drop by 5.4% since last year.

Jon Swallen, Chief Research Officer at Kantar Media North America, expects the 3rd quarter figures will benefit from the Olympics and political campaign spending but predicting beyond that is difficult because “sustained long-term improvement will probably be linked to the health of consumer spending on the goods and services that marketers provide.”

[Sources: Data Dive: TV Ad Spend and Influence. 2012. Web. 18 Sept. 2012; US Ad Spend Inches Up 0.9% YOY in Q2. Marketingcharts​.com. 11 Sept. 2012. Web. 18 Sept. 2012; Kantar Media Reports. Kantarmedia​.com. 10 Sept. 2012]
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-owner of several small businesses in the health care services sector.