Measured Ad Spending in the U.S. Slips 3.9% in Q2 — Kantar Media

By Nathalie Tadena, The Wall Street Journal

Advertisers in the U.S. pulled back on most types of traditional media as well as on online desktop display ads in the second quarter, according to a new report from Kantar Media.

Total U.S. advertising expenditures fell 3.9% in the latest period to $38 billion, Kantar Media’s data shows, as advertisers reduced spending on 15 of the 22 media categories the report tracked. The analysis from Kantar Media, a unit of WPP, includes ad spending on traditional media and paid search and online display, but does not include spending for other fast-growing digital mediums such as online video and mobile.

While “the migration of money to digital is certainly shaping the results we’re seeing here,” it’s not the only factor at play, said Kantar Media Chief Research Officer Jon Swallen. Some of the most pronounced ad expenditure declines, such as those experienced by newspapers, magazines and Spanish-language TV, are so large that “digital couldn’t possibly explain all of the negative number,” Mr. Swallen said. Furthermore, even mature areas of digital advertising – in particular, online display—are beginning to suffer, he said.

According to Kantar Media, measured media spending is expected to lag nominal GDP for the fifth consecutive year since the recession, which is “highly, highly unusual,” Mr. Swallen said.

“It speaks to the fragmentation of media advertising,” Mr. Swallen said. “It speaks to all of the different places that are competing for ad money which puts downward pressure on ad pricing.”

The moderation in ad spending also reflects to some extent a slowdown in certain parts of the economy that some marketers depend on to fund marketing budgets, he added. The ad market is likely in better shape than what Kantar Media’s figures indicate because they don’t fully reflect all digital ad dollars, but the overall advertising market is still in a low-growth environment, Mr. Swallen said.

“It is a very uneven playing field,” Mr. Swallen said. “With all the different media platforms that are competing for advertising budgets and widely varied rates of performance across those different platforms, it’s misleading to talk about the total advertising economy… It’s very much a patchwork quilt.”

Ad spending on television platforms, which represent the bulk of marketers’ ad dollars, fell 4.5% in the second quarter. Network TV ad spending was up 1%, though year-ago spending levels were impacted by the Winter Olympics as several marketers moved TV budgets from the second quarter into the first quarter to advertise around the sporting event. On a normalized basis, network TV spending was down slightly for the second quarter, Kantar Media said. Cable TV spending was down 5.1% for the quarter.

As the television industry continues to grapple with sliding ratings and changing consumption patterns, networks have increased the amount of paid commercial time in their shows to squeeze out more ad revenue. Kantar Media found that broadcast networks packed 2.8% more paid ad time into programming in the quarter compared with the prior year, while cable networks increased paid ad time by 4.6%.

Within the digital categories that Kantar Media’s report analyzed, results were mixed. Paid search — text ads on Google and Bing delivered to desktop PCs and tablets — increased 7.7% for the period. In contrast, online display advertising, which doesn’t include video or mobile ad formats, fell 4.7% in the quarter, due in part to lower CPMs and reduced page traffic. Those lower audience levels “may in fact be the cannibalization of users moving from desktop to mobile devices” Mr. Swallen said.

Cinema ad spending jumped 15%, the biggest growth rate of any individual media type tracked by Kantar Media. Cinema advertising, however, represents just a fraction of major marketers’ ad dollars.

Percent Change In Measured Ad Spending

View the original article from The Wall Street Journal