Total ad expenditures declined slightly in the first half of 2007 but automakers and department stores made big cuts.

Total ad spending in the United States decreased one half percent in the first half of 2007 despite a 23.2% increase in Internet advertising, according to the Nielsen Company. The cutback was much worse in local print media.

The overall decline was in comparison to the first half of 2006. It also contrasted with a 4.6% increase for all of 2006.

Bright spots in the Nielson report, besides the Internet increase, included an 8.4% jump in national magazine advertising, a 6.5% rise in national Sunday supplements and a 5.1% increase in outdoor advertising.

The figures were compiled and released by Nielsen’s Monitor-Plus, which promotes itself as the leading provider of competitive advertising information.

Network radio, newspapers took biggest hits

The biggest American advertising declines, according to Nielsen, were:

• Network radio, down 8.5%
• Local newspapers, 8%
• National newspapers, 5.9%
• Business to business magazines, 5.7%
• Local magazines, 5.2%
• Local Sunday supplements, 4.7%

The significant drops in local print advertising (newspaper and magazine) were probably caused, at least in part, by a 7% drop in department store spending and another drop in local automotive dealership advertising. The local dealership sector fell 5% in the first six months of 2007 and 3.5% in 2006.

GM, Chrysler and Toyota all cut back on advertising

With three of the four biggest automaker advertisers cutting back, the automotive sector showed the biggest decline in advertising in the first half of 2007, dropping 10% to $5.8 billion. That follows a $198 million (1.4%) decrease in 2006.

General Motors was second in overall company spending, but showed the biggest cutback, going from $1.3 billion to $954 million, a 27.7% decrease.

Toyota cut its advertising 5.2% and Chrysler decreased 4.4%. Ford was the only one of the top four automobile makers to increase its advertising, raising its spending 2% to $871 million.

Proctor and Gamble, AT&T also decreased spending

Seven of the nation’s top 10 advertisers decreased their spending in the first half of the year. Proctor and Gamble, which produces dozens of consumer products, led all advertisers in spending with $1.657 billion. But even that was down 1.4% from the first half of 2006.

Third place AT&T Inc., like GM, dropped out of billion dollar class, decreasing its spending from $1.05 billion to $914 million, down nearly 13%. However, the telephone and wireless industry sector increased its advertising 6%.

The direct response product industry showed the biggest sector gain, 7%.

Major media companies continued hefty profits

How the total decrease in advertising volume affected the major American media companies was not known because their cumulative revenue figures for the first half of 2007 were not immediately available. Most of them are highly diversified and can probably offset advertising decreases with revenues in areas such as cable subscriptions.

The top media companies, headed by Time Warner Inc., Comcast and Walt Disney, reported hefty increases in revenue for the first half of 2007, but all three stocks declined in the same period.

Here's the follow-up discussion on this article:

View all related messages

Post to this discussion

For a complete listing of article comments, questions, and other discussions related to Carroll Trosclair's Advertising topic, please visit the Discussions page.