Ad Spending Down Through September

The drop-off in advertising spending accelerated during the third quarter, with network television and national newspapers clearly feeling the effects of the Sept. 11 attacks, according to a widely watched survey released Monday.

Overall ad spending during the first nine months of the year fell by 7.8%, to $68.8 billion, according to market research firm CMR, a New York-based division of Taylor Nelson Sofres.

Only a handful of sectors, including cable television and outdoor advertising, showed growth through the first nine months of the year, CMR said.

Although the retail sector’s holiday push is giving the advertising industry a slight boost, spending isn’t expected to rebound noticeably until after the economy improves, said CMR President David Peeler.

Most analysts predicted a drop in ad spending for 2001, and several say the industry won’t rebound until late 2002 or early 2003.

Annual U.S. advertising expenditures have declined only four times since 1934, Merrill Lynch analyst Jessica Reif Cohen said.

Those dips came in 1938 (-8%), 1942 (-4%), 1961 (-1%) and 1991 (-1%). Reif Cohen, who predicts a 3% drop in 2001 and a 1% drop in 2002, said the industry last saw back-to-back annual declines during the Great Depression.

Many of the nation’s largest advertisers continued to cut ad budgets during the third quarter, according to CMR.

General Motors Corp., the nation’s largest advertiser, has cut its advertising by 28.4% to $1.6 billion so far this year. No. 2 Philip Morris Cos. cut its spending by 20.6% to $1.2 billion.

The handful of big firms that have increased ad spending includes AOL Time Warner Inc. (up 11.9% to $1 billion) and Ford Motor Co. (up 5.4% to $927 million).

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Advertising Declines

Advertising spending continued to decline during the third quarter, with just a handful of categories registering gains. Gains and losses for the first three quarters of the year:

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Ad % change revenue from Medium (billions) year ago Network TV $14.1 -8.0% Magazines 11.9 -5.1 Spot TV 10.8 -17.9 Cable TV 7.8 +2.1 Sunday newspapers 7.5 -8.2 Daily newspapers 5.9 -6.0 Syndication-national 2.4 +3.4 National newspapers 2.2 -21.5 Outdoor 1.9 +2.6 National spot radio 1.6 -18.6 Sunday magazines 0.8 +3.4 Network radio 0.6 -11.0

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Source: CMR, a Taylor Nelson Sofres company