Bad News About Ads, and Worse

You're spending less. Advertisers are spending less. The competition for your dollar is heating up. But there is some encouraging news for some advertising-based media (but not many).

Research firm TNS Media Intelligence reported Wednesday that second quarter spending by advertisers on U.S. media dropped 3.7 percent from the same period in 2007. That's the sharpest quarterly drop since 2001. For the first six months of the year, advertisers spent 1.6 percent less than in the first half of the year before.

Even worse for traditional media, what few marketing dollars being spent are going to media that promise to more precisely target messages to particular demographics: Internet, cable TV, and syndicated television, according to TNS.

"If there's a small pool of sale revenue, of revenue out there for you, consumers are cutting back, there's less money to be made," says Jon Swallen, senior vice president for research at market research firm TNS "Your marketing budget better be working even harder than it has in the past."

Randy Falco, chairman and chief executive of AOL, echoed that sentiment in his talk today at New York City's Advertising Week.

"It's hard enough being a marketer these days; building a brand now means finding reaching, engaging, and influencing people," Falco said. "Throw in a tough economy, which we all know about and are struggling through, and it puts more that much more pressure on R.O.I. and every dollar spent."

Spending on display Internet ads expanded 8 percent in the first six months of the year compared with the first six months of 2007; spending on cable TV ads rose 3.1 percent; on syndication climbed 10.2 percent.

But even Internet spending is slowing down. In the first quarter, spending rose 8.5 percent over the previous year. In the second quarter, growth slowed to 7.6 percent. The early results for the third quarter indicate a 5.5 percent increase.

"That's what's so significant about the current trends we're seeing. This isn't a case of an isolated slow down in just television or just magazines. This is across the board. Everything is slowing down," Swallen said.

by Willow Duttge

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