Display Ad Spend Lost Momentum in Q1

  |  June 11, 2008   |  Comments

TNS report provides some of the first evidence online advertising is hurt by macro-economic woes.

Spending on display ads appears to have faltered during Q1, growing only 8.5 percent, according to a new TNS Media Intelligence report.

That's only about half the growth rate of the year-ago period, when TNS reported display ad spending grew by 15.9 percent.

Jon Swallen, SVP of research at TNS Media Intelligence, said certain verticals notably curtailed their display ad spending. Telecom advertising, usually a heavy user of Internet display ads, was "very weak" in first quarter, he said. So was retail, particularly local advertisers that divide their online budgets between display and search.

"The difficulties the retail market is going through, with all the cutbacks in consumer spending and all the uncertainty about the general economy resulted in cutting back in many sectors," said Swallen.

The report provides some of the first evidence online advertising has been negatively affected by the staggering U.S. economy. Of course the pain is more pronounced for overall ad expenditures, which according to TNS increased by only 0.6 percent in the first quarter. Of the seven sectors measured (TV, magazine, newspaper, Internet, radio, outdoor and newspaper inserts) only newspaper insert spending, which grew 8.8 percent compared to Q1 2007, outpaced Internet display ads.

Meanwhile, spending on newspaper advertising declined 5.2 percent quarter-to-quarter and radio advertising dove 4.5 percent, according to TNS. Television saw meager growth of 1.7 percent. Outdoor advertising fared a little better, at 2.5 percent, but magazine advertising -- coming in with 0.8 percent growth compared to Q1 of last year -- was virtually stagnant.

While notably weak in Q1, online ad growth has been slowing for some time. Beginning last year, reports from Nielsen, the Interactive Advertising Bureau and TNS all suggested growth in digital advertising, while still healthy by most measures, has settled down to a more gradual pace.

Swallen said the Internet's stamina at remaining an attractive place to advertise "reflects the ongoing shift of ad money from traditional analog media to a variety of digital media, of which Internet display is one form but not the only one."

One of the vanguards of online advertising is the financial services industry, said Swallen. Given the sub-prime mortgage crisis, the financial services industry is enduring some tough times and its overall ad spend was flat for the period, according to TNS. However, Swallen noted the category's expenditure on Internet ads grew 14 percent compared to Q1 of 2007. "That industry allocates a larger share of its budget to the Internet than any other category," he added.

ClickZ Live Toronto On the heels of a fantastic event in New York City, ClickZ Live is taking the fun and learning to Toronto, June 23-25. With over 15 years' experience delivering industry-leading events, ClickZ Live offers an action-packed, educationally-focused agenda covering all aspects of digital marketing. Register today!

ClickZ Live San Francisco Want to learn more? Join us at ClickZ Live San Francisco, Aug 10-12!
Educating marketers for over 15 years, ClickZ Live brings together industry thought leaders from the largest brands and agencies to deliver the most advanced, educational digital marketing agenda. Register today and save $500!

ABOUT THE AUTHOR

COMMENTSCommenting policy

comments powered by Disqus

ClickZ Today is our #1 newsletter.
Get a daily dose of digital marketing.

COMMENTS

UPCOMING EVENTS

Featured White Papers

Gartner Magic Quadrant for Digital Commerce

Gartner Magic Quadrant for Digital Commerce
This Magic Quadrant examines leading digital commerce platforms that enable organizations to build digital commerce sites. These commerce platforms facilitate purchasing transactions over the Web, and support the creation and continuing development of an online relationship with a consumer.

Paid Search in the Mobile Era

Paid Search in the Mobile Era
Google reports that paid search ads are currently driving 40+ million calls per month. Cost per click is increasing, paid search budgets are growing, and mobile continues to dominate. It's time to revamp old search strategies, reimagine stale best practices, and add new layers data to your analytics.

WEBINARS

Resources

Jobs

    • GREAT Campaign Project Coordinator
      GREAT Campaign Project Coordinator (British Consulate-General, New York) - New YorkThe GREAT Britain Campaign is seeking an energetic and creative...
    • Paid Search Senior Account Manager
      Paid Search Senior Account Manager (Hanapin Marketing) - BloomingtonHanapin Marketing is hiring a strategic Paid Search Senior Account Manager...
    • Paid Search Account Manager
      Paid Search Account Manager (Hanapin Marketing) - BloomingtonHanapin Marketing is hiring an experienced Paid Search Account Manager to...