Bloomberg News

U.S. Ad Spending Declines in Consecutive Quarters

September 11, 2007

U.S. advertising spending declined in consecutive quarters for the first time in six years as retailers and automakers trimmed their marketing budgets, TNS Media Intelligence reported.

Spending fell 0.2 percent to $38.1 billion in the second quarter after a 0.3 percent drop in the first to $34.9 billion, TNS said. Magazine and Internet gains cushioned declines in broadcast television and newspapers, the New York-based research company said today in a statement.

``There's fundamental weakness in retail combined with declining rates in corporate profit growth,'' research director Jon Swallen said in an interview. ``That's created a cautious and conservative mentality at marketing companies and led to a reduction in advertising budgets.''

Retail spending dropped 1.3 percent to $8.4 billion, TNS said. Spending by U.S. automakers fell 11 percent to $3.4 billion. General Motors Corp. trimmed its budget by more than $100 million in the three months ended June, marking the fifth consecutive quarter in which GM cut ad expenditures by more than 15 percent.

Spending on network television advertising fell 3.6 percent to $11.8 billion while newspaper ads declined 5.8 percent to $12.9 billion in the first half. Radio ad spending fell 2.7 percent to $5.14 billion.

``Ad spending will continue to face challenges during the second half,'' TNS Chief Executive Officer Steven Fredericks said in the statement. TNS lowered its forecast for 2007 ad expenditures in June, predicting a rise of 1.7 percent to $152.3 billion. TNS expected a 2.6 percent gain in December.

Internet display ads gained 18 percent to $5.52 billion, TNS said. Spending on magazines rose 4.6 percent to $14.6 billion.

Universal McCann in December forecast that U.S. companies would increase ad spending by 4.8 percent this year. Merrill Lynch & Co., also in December, projected growth of 2.6 percent.

To contact the reporter on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net.

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net.


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