TNS: Internet Spend Increases in a Down Quarter for the Ad Biz

Internet display advertising expenditures in the first quarter grew 16.7 percent to $2.7 billion, compared to the same period last year. The figure is from a TNS Media Intelligence report describing trends in advertising across all media.

Of the 19 measured media TNS tracks, six categories showed year-over-year gains in Q1. The Internet topped al categories with 16.7 percent growth. Internet display advertising for the quarter reached $2.7 billion, accounting for 7.7 percent of the total ad spend. There is indication advertisers are moving dollars to the Internet from other media, including blue chip advertisers who have until recently remained loyal to offline media.

“We see it more and more within key advertising segments,” said TNS SVP of Research Jon Swallen. “The top 50 advertisers, big blue chip companies that represent one-third of the ad spend, have been most wedded to offline media. In the past few years they lagged in budget of general proportions spent on the Internet.”

Blue chip advertisers now commit more to online budgets, which Swallen characterized as an inflection point for online. “Over the last two quarters, we’ve seen those advertisers moving money to the Internet at a faster rate. [They are] beginning to catch up to the overall market average,” he said. “That’s something we hadn’t seen for a lengthy period of time.”

A few factors make the Internet more attractive, according to Swallen. “The degree of accountability is an advantage, targeting ability is an advantage, large supply of advertising space on the Internet is an advantage. It helps control price inflation. You put those three things together and the Internet becomes an attractive proposition for many advertisers.”

Price inflation of media was what largely accounted for growth in the consumer magazine space. The channel experienced 4.4 percent growth, though the report said it was due to higher rate card pricing and an uptick in page counts.

Across all media, total advertising expenditures dipped 0.3 percent to $34.9 billion in the early part of the year. A partial explanation is the absence of a large event like the Olympics, which occurred in the first quarter of 2006. Even without the money spent during the Olympics, TNS called it a “sluggish January,” though the company said expenditures regained some vigor near the end of the quarter.

“No matter how you slice it or dice it, it was a very soft quarter,” Swallen said.

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