Ad Spending Dropped 12% in 2009, but Things Are Looking Up

Overall ad spending in the U.S. fell 12.3% in 2009, according to a new report from Kantar Media, triple the rate of decline from 2008. But last year's ad-sales drop was moderated somewhat by a fourth quarter in which nearly all media improved on their performances from earlier in the year. And things seem to be looking up further still -- depending on what happens with consumer spending.

"The advertising recession began to ease in the final two months of 2009 and preliminary figures from the first quarter of 2010, when compared against the abyss of a year ago, indicate many sectors are experiencing growth," said Jon Swallen, senior VP-research at Kantar, in the report. "Given the restraint in consumer spending, it appears marketers have more confidence right now than their customers. As we get deeper into 2010, the pace of consumer activity will be a key determinant of the strength and durability of the advertising recovery."

A forecast from Magna in January predicted recovery wouldn't arrive until the second quarter of this year, anticipating that the first quarter would deliver the last ad-spending decline of the downturn.

Last year, however, the troubles were still raging. Some of the worst suffering was by local magazines, which saw ad revenue plunge 27.7%; business-to-business magazines, where ad revenue fell 26.2%; spot sales of national radio commercials, where revenue sank 24.6%; spot TV commercials, down 23.7%; local radio, down 20.6%; and local newspapers, down 20%.

Internet display advertising managed to improve its ad revenue by 7.3% last year, on the other hand, while free-standing inserts distributed in newspapers improved ad revenue by 3% as package-goods companies targeted shoppers with coupon programs.

And cable TV only lost 1.4%, while network TV slid 7.6% -- not bad in the scheme of things.

Among the top 10 advertisers last year, No. 1 Procter & Gamble cut its ad outlay by 15.6%, according to Kantar, followed by No. 2 Verizon with a 6.9% reduction and No. 3 General Motors, which expanded spending by 1.3%.

Three of the top advertisers boosted spending dramatically: Pfizer was up 32.7%, Walmart up 35.4% and Sprint Nextel was up 29.9%. Overall, the top 10 marketers by spending reduced their outlay by just 0.9%.

Among the major advertising categories, three out of seven increased spending last year: telecom, food and candy, and pharmaceuticals. Others posted double-digit retreats, including automotive, financial services, local services, miscellaneous retail and direct response.