Nielsen: Last Year, 4.6% Increase in Ad Spending

March 20, 2007

By Katy Bachman, Mediaweek

NEW YORK -- Nielsen Monitor-Plus reported Monday a 4.6% increase in advertising spending to $139.07 billion, compared with 2005. Most of the 17 media experienced growth, led by the Internet with a 35% gain to $6.7 billion, followed by a 9.1% gain in Spot TV in the top 100 markets to $25.6 billion. Also showing strong gains were Spanish-language national TV, up 8.1% to $2.9 billion, and outdoor, up 8.1% to $3.7 billion.

Other media showing growth were: national Sunday supplements (5.6% to $983 million), local Sunday supplements (4.6% to $60 million), network TV (4.2% to $23.8 billion), national magazines (3.9% to $18.6 billion), local magazines (3.3% to $543.9 million), national newspapers (2.9% to $1.8 billion), national cable TV (1.8% to $23.7 billion) and spot radio (0.7% to $6.1 billion).

Media that ended the year with negative growth were: business-to-business magazines (-0.2% to $4.2 billion), coupons (-0.6% to $409.3 million), spot TV in markets 101 to 210 (-0.9% to $1.2 billion), network radio (-2.4% to $1.1 billion) and local newspapers (-3.6% to $13.9 billion).

Although ad spending among the major media grew in 2006, budgets among the top 10 advertisers were up only 1% to $17.9 billion. Six of the top 10 spent more in 2006, including top advertiser Procter & Gamble (up 1.1%), and both telecommunications companies, AT&T (up 44.4%) and Verizon Communications (up 16.2%).

Automotive advertisers were mixed. General Motors chopped its budget by 16%, as did DaimlerChrysler, which spent 6.1% less. Both Ford Motor Co. and Toyota Motor Co. increased spending by 10.2% and 14.2%, respectively.

Despite an uptick in spending among certain auto advertisers, in general both categories of automotive (automotive/auto dealers and automotive local dealers) were down 1.4% and 3.5%, respectively. In total, the automotive advertisers cut more than $374 million out of budgets.

The biggest growth categories for 2006 included pharmaceutical (up 14.9%), wireless telephone services (up 10.5%), and direct response products (up 10%).

Product placements in primetime network programming also leveled off in 2006 with a decrease in the overall number of placements to 79,701 from 102,793 in 2005. The shift "can be largely attributed to shifts in programming such as the airing of more dramas, which tend to carry less product placements than other program genres," said Annie Touliatos, director of marketing and strategy for Nielsen Product Placement Service.

Coca-Cola soft drinks was the top brand using product placement, followed by Chef Revival Apparel, Nike Apparel, 24 Hour Fitness Centers clubs and the Chicago Bears (NFL team). The top programs containing product placements were Fox's American Idol, followed by CBS' Amazing Race, ABC's Extreme Makeover Home Edition, NBC's The Biggest Loser and UPN/CW's America's Next Top Model .

More than 2.6 billion political spots aired on local TV, representing more than 93% of all political ad expenditures, up 24% from the previous midterm elections in 2002. A sizable percentage of the ads, 41%, were classified as negative.