TNS Media Intelligence released a report indicating recession fears have impacted advertising. The current economic crisis has affected the advertising industry, and the slowdown may spill into advertising jobs. Expenditures on advertising in 2007 increased by a negligible amount, though some sectors within advertising show promise.

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	Online advertising grew faster than advertising in any other media, with a 15.9% increase to $11.6 billion in expenditures.

The advertising industry witnessed a slump in total expenditures in 2007. Industry experts anticipate, however, that the upcoming Summer Olympics and the U.S. presidential elections may boost advertising spending in the third and fourth quarters of 2008. For now, though, the advertising market is at a standstill.

Report Shows Negligible Gains

TNS Media Intelligence released a report this week indicating total U.S. advertising spending in 2007 rose just 0.2% from the previous year. TNS Media Intelligence, a division of Taylor Nelson Sofres, tracks advertising expenditures and occurrence data across 20 media in the U.S. The report indicates that weakening economic conditions drastically affected the advertising industry in 2007.

2007 ended with $148.99 billion in advertising spending, up less than one percent compared to 2006. TNS Media Intelligence had predicted larger gains at the beginning of the year. In January 2007, TNS anticipated that 2007 overall would produce 2.6% in advertising expenditure gains. Even this rate of growth was considered slow, but such a slight gain of 0.2% was not foreseen.

Some Sectors within Advertising Show Promise

Online advertising grew faster than advertising in any other media, with a 15.9% increase to $11.6 billion in expenditures. With the amount of spending on paid searches, total Internet spending reached $21.1 billion.

Magazine advertising also fared well with a 7% increase up to $24.43 billion. Advertising for consumer packaged goods was the main source of the increase. Outdoor advertising also saw an increase of 4.9% from the previous year.

While cable television advertising rose 6.5% to reach $17.8 billion in expenditures, the remainder of television advertising sectors reported losses. Network television advertising slipped 2%, partly due to a heavy loss of political advertising, which was strong in 2006. The 2008 election may very well boost network television advertising this year.

Direct-response marketing recorded a significant 17% increase. However, due to spending reductions by automotive and retail advertisers, newspapers and radio both reported losses. Radio spending slipped 3.5%, and newspapers slipped 5.6%.

A Majority of the Top Advertisers Cut Budgets in 2007

Seven of the top 10 advertisers cut their advertising budgets in 2007. General Motors and Time Warner both cut their advertising budgets by a significant amount, 7.7% and 5% respectively. Procter & Gamble, again the top advertiser, recorded an increase of 5.6% in advertising spending. However, the second biggest advertiser, AT&T Inc., spent 4.0% less on advertising in 2007 than in 2006. Overall, the top advertisers spent 0.3% less on advertising last year than in the previous year.

Implications for the Advertising Job Market

What remains to be seen is how this slump in advertising sales affects the job market. Will agencies be forced to cut back on employees? Or will 2008 bring an increase in U.S. advertising spending, thus saving jobs?

Data from the U.S. Department of Labor’s Bureau of Labor Statistics projects a 12% increase in advertising employment through 2016. Will last year’s advertising slump negatively impact this projection? Only time will tell.

The entire TNS report can be found online. A breakdown of spending by medium is featured, along with a list of the top advertisers.

On the net:

TNS Media Intelligence

Advertising Age

Forbes

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