Kantar: Ad Spending Still Growing, But Recovery Is In Jeopardy

While most large ad budgets have been locked in for the next few months, unless there is a miraculous and quick economic turnaround, the ad recovery that began in 2010 is looking weaker and weaker.

The latest figures from WPP Group’s Kantar Media showed that ad dollars were up a decent 3.2 percent in the first half of 2011 to $71.5 billion. But spending growth eased slightly during the second quarter and was up 2.7 percent compared to the same period last year. While display spending gains remained in the double digits, a wider slowdown would ultimately affect online ads.

The big worry is that spending growth for the largest 100 advertisers stalled in Q2 and the ad market became more dependent on the comparatively smaller budgets of mid-sized advertisers as the main source of growth, said Jon Swallen, SVP Research at Kantar Media.

So far, online appears resilient. But as observers saw in 2009, when the double digit spending surges turned into single digit declines, online is not immune to general economic and advertising market winds. But for now, online is making the wider ad industry performance look healthier than it is.

Internet advertising accounted for more than half of the dollar gains in total ad spending during the first six months of the year. Display spending gained 12.9 percent and search ads — this is the first time Kantar has incorporated search into its data — rose 8.6 percent. Both display and search gains were derived from spending by travel, local service and insurance categories.

The rise of online is part of a continual shift from traditional media to digital. As further proof, ad spending on cable networks increased 11.8 percent during the first half of the year while broadcast dollars dropped 7.6 percent.

One of the biggest losers in this shift has been newspapers, though Kantar did have a small consolation the industry. While newspapers still lagged the overall market, with national papers down 4.9 percent the local segment ended its streak of 22 consecutive quarters of spending declines and eked out a 2.5 percent increase in Q2 and a 0.6 percent gain for the half year. But that just means that instead of being in a bottomless pit, newspapers are just stuck in a massively deep one. Release