Bloomberg News

U.S. Ad Spending Rose Less Than 1 Percent, TNS Says

June 11, 2008

U.S. advertising increased less than 1 percent last quarter as companies cut the growth in spending on Internet, cable television and magazine promotions.

Advertising in newspapers and radio continued to shrink. Spending overall rose 0.6 percent in the first quarter from a year earlier, after a 0.1 percent drop in the fourth quarter, TNS Media Intelligence, a market researcher, said today in a statement.

Advertisers are reacting to consumer concerns about rising food and energy prices, the housing market, tight credit and unemployment, said Jon Swallen, a senior vice president of research at New York-based TNS. Consumer spending rose 1 percent last quarter, the smallest gain since the 2001 recession, according to a May 29 Commerce Department report.

``Advertisers are taking a shorter-term focus, holding back as long as they can before making commitments because of this uncertain economic backdrop,'' Swallen said.

Internet display advertising rose 8.5 percent, less than the double-digit percentage growth in 2007, TNS Media said. Spending increases for cable-TV and consumer magazines were also less than in recent periods.

Network television ad sales gained 0.8 percent in the first three months of the year, the most since the 2006 Winter Olympics. The networks made 2.3 percent more air time available to advertisers to generate the increase, Swallen said.

``That implies that unit pricing was down 1.5 percent,'' Swallen said. ``A plus is better than a minus, but for network TV it's still just at the market average. It's hardly robust growth.''

Newspaper spending fell 5.2 percent, Swallen said. Consumer magazine spending rose 0.2 percent after gaining 7.2 percent in the fourth quarter. Cable-TV spending rose 4.1 percent, slowing from 6.5 percent growth for all of 2007.

TNS Media doesn't release dollar amounts on ad spending.

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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