Ad spending rises 3 percent in 2012

Ad spending grew 3 percent during 2012, its third consecutive year of growth, with television spurring much of the increase.

Perhaps most heartening, even without the election and the Olympics, which between them accounted for $2 billion in spending gains, the media economy would have grown at a 1.5 percent pace.

Total spending finished at $140 billion, according to numbers released today by Kantar Media.

Fourth quarter was up 2 percent over last year, with sluggish holiday spending by department stores balanced out by strong political expenditures.

“Our analysis suggests that about half of the $4 billion in ad spending growth that was added to the marketplace represented incremental spending, attributable to the Olympics and elections,” Jon Swallen, chief research officer at Kantar Media, tells Media Life.

“So if there had been no Olympics or election we think the ad market would have still grown, but by about $2 billion rather than $4 billion, or 1.5 percent versus 3 percent.”

Television paced full-year spending gains. The medium was up 8 percent in 2012, including a 10 percent gain for spot television, which received the bulk of the political dollars, and a 15 percent increase for Spanish-language television, which was up 20 percent in fourth quarter alone.

Network TV rose 9 percent, including a nice boost from the Summer Olympics. In fact, sports was a major driver for broadcast the entire year, Swallen says.

“It speaks to the continued power of live sporting events and their ability to hold ratings,” he notes.

“There has been less ratings erosion in live sports programming than entertainment or news programming. And that has bolstered ad prices and helped the gross ad revenue for the networks.”

Cable, which has been one of TV’s biggest gainers the past few years, actually saw a 2 percent decline during fourth quarter and was up only 3 percent for the year.

But Swallen says that was likely just a fluke and not a long-term trend. He notes that many cable advertisers poured money into the Summer Olympics and then had thinner budgets during fourth quarter, which led to less advertising.

“So that’s a one-time phenomenon,” he says.

Radio spending was up 3 percent last year, including a 16 percent gain for network radio.

Outdoor grew 5 percent for the full year and spiked 8 percent in fourth quarter. Kantar credits that growth to advertisers who were squeezed out of radio by political. Many of them moved their money to outdoor instead.

Online, which consists of only display ads by Kantar’s measure, fell 3 percent for the year, though it was up 1 percent during fourth quarter.

Print continued to struggle. Magazines declined 2 percent last year, while newspapers were down 3 percent, with Spanish-language papers (up 2 percent) the only segment to see growth.

The Kantar report notes that large- and medium-sized advertisers saw solid spending growth last year. The top 100 were up 3 percent, and mid-sized ones grew 5 to 7 percent.

That’s often an indicator of greater confidence in the economy.

“I think it does reflect confidence in the economy, but I can’t prove it,” Swallen says.

“But I know with the top 100 advertisers, their spending tends to be more closely correlated to general economic growth.”

Tags: 2012 ad spending, ad spending, advertisers, economy, fourth quarter, fourth quarter ad spending, jon swallen, kantar, kantar media, media economy, political, radio, ratings, summer olympics, television