Kantar: Total US ad spend up 3% last year


Dollar SignWe finished the year at $140 billion, according to new data from Kantar Media, up 3% thanks to the presidential election and Olympics. Ad spend in Q4 rose 2% versus the year ago period. Television continued to lead the ad market for the quarter and the year, but network radio was the real standout in 2012.

Q4 radio expenditures were lifted by the influx of ad money from political candidates and groups. National Spot Radio was up 8% and Local Radio gained 3% in the period. Full-year results were also aided by strong spending from local service businesses and auto dealers as National Spot Radio rose 3% and Local Radio was unchanged. Network Radio showed the biggest percentage gain (16%) of any media, 2012 vs. 2011.

“The advertising market has grown for three consecutive years and in 2012 it added more than $4 billion in spend, with the Summer Olympics and political advertising contributing about one-half of the gain,” said Jon Swallen, Chief Research Officer at Kantar Media North America. “Large advertisers also played a significant role. After reducing their media budgets in 2011 as a precaution against slowing economic growth, the Top 100 marketers reversed course in 2012 and invested more.”

Measured Ad Spending By Media
Television continued to lead the ad market in Q4. Network TV expenditures rose 5% in the quarter compared to the prior year, with NFL and NCAA football contributing more than one-half of the dollar volume gain. FY Network TV spending also received a boost from the Summer Olympics and was up 9%.

Spot TV expenditures increased 12% in fourth quarter, aided by a closing surge of political ad dollars in advance of the November elections. For the year, Spot TV finished 10 percent higher, thanks not only to political spending but added investment from both auto manufacturers and dealers, which continued to pump money into the medium in response to a strong sales climate for new vehicles.

Spanish language TV ad spending surged 20% in Q4, paced by higher sell-out levels at over-the-air networks. For all of 2012, the segment increased 15%.

Cable network TV spend in Q4 was dragged down by reduced holiday ad spending as well as cutbacks from direct response marketers, and finished the period with a decline of 2%. Full-year expenditures advanced 3%.

With political ads grabbing a larger share of the radio inventory, some advertisers chose to redirect their local spending to Outdoor, giving an extra boost to this medium. Outdoor increased 8% in Q4 and 5% for the full year.

Online display in Q4 finished 1% higher compared to the prior year. Digital spending was up significantly among a broad range of retailers during the key holiday selling period, and travel category expenditures were also robust. For the full year, online display spending, which does not include either video or mobile ad formats, declined 3 percent.

Print continued to lag the overall marketplace. Consumer magazine expenditures fell by 1 percent in Q4 and were down 3 percent for the year as weaker spending from pharmaceutical, financial service and travel advertisers more than offset gains from the apparel and personal care product categories.

Meanwhile, National Newspaper declined by 13% in Q4, due to steep cutbacks from financial service and telecom marketers. Full-year spending declined 12 percent. The decline in Local Newspapers was less steep, totaling 3 percent fewer dollars in Q4 and 2 percent less for the entire year. The losses in Newspaper spending continue to track with reductions in the amount of space sold.

Percent Change in Measured Ad Spending

Measured Ad Spending By Advertiser
Spending among the ten largest advertisers in 2012 reached $15,346 million, a 2 percent decline compared to a year ago. However, among the Top 100 marketers, a diversified group that represents over two-fifths of all measured ad expenditures, spending was 3 percent higher.

Procter & Gamble was the top advertiser with spending of $2,805 million down 5 percent compared to 2011. This represented the second straight year of media cutbacks for the consumer products company. The declines echo a publicly announced corporate initiative to reduce marketing expenses by shifting budgets towards more cost effective digital media.

Comcast was the second largest advertiser in 2012 with expenditures of $1,713 million, an increase of 10 percent. The company continued to hike spending for its Xfinity brand offering of video, voice and broadband service. Other leading telecom advertisers sharply reduced their media spending in 2012. AT&T expenditures dropped 14 percent to $1,572 million, despite their major investment in the Summer Olympics. Verizon spent $1,409 million, a decline of 13 percent.

The largest growth rate among the Top Ten marketers was posted by Toyota, up 13 percent to $1,239 million for the full year as the company fully restored operations and regained market share following the 2011 Japanese earthquake and tsunami.  In contrast, General Motors lowered its 2012 media spending by 7 percent to $1,642 million, in part due to a slowing pipeline of new model introductions. As manufacturer support has been trimmed, GM dealers have continued to lift their spending and bear a larger share of the overall marketing effort. Expenditures at Chrysler also retreated, down 14 percent to $1,065 million compared to a year ago period that was inflated by several big marketing launches.

L’Oreal media spending for 2012 was $1,461 million, up 9 percent increase and the third consecutive annual increase from the company. Since bottoming out in 2009, ad expenditures at L’Oreal have risen by more than 70 percent.

Top Ten Advertisers of 2012

Measured Spending By Size of Advertiser
The Top Ten advertisers are certainly large, but they represent just a small fraction of all spending and can be an incomplete indicator of broader trends. Ranking and grouping companies into tiers provides deeper insights into how different segments of advertisers are behaving compared to the average and where growth is occurring.

Expenditure growth in 2012 occurred across the Top 1000 advertisers, but was strongest at mid-size marketers outside the Top 100. The tier of companies ranked 101-250 had total spending of $21,057 million which was about a 15 percent share of the total marketplace. Year-over-year spending for this slice rose 7 percent, more than double the market average. Right behind was the tier of companies ranked 251-1000 with an increase of 5 percent.

Small advertisers, defined as those beyond the Top 1000, lagged the market with aggregate expenditures nearly flat in 2012. This tier spent $32,151 million and accounted for nearly one-fourth of total ad spending. Historically, media spending within this segment has been more variable and sensitive to the economic climate.

2012 Spending by Size of Advertiser
Measured Ad Spending By Category
Expenditures for the ten largest advertising categories grew 3 percent in 2012 and reached $87,502 million.

Retail was the leading category in dollar volume and finished 2012 up 3 percent at $16,345 million, despite very weak spending by department stores during the critical year-end holiday season.

Automotive registered the largest growth rate among the Top Ten categories, climbing 7 percent to reach $14,840 million. Growth peaked back in first quarter at 23 percent and slowed sequentially in each successive quarter to just a 2 percent gain in Q4. Dealer spending held up throughout the year while Tier 1 manufacturer expenditures contracted in the second half.

Telecom expenditures totaled $8,660 million, a 4 percent increase. Growth was concentrated in the Wireless Phone Equipment segment as Apple and Samsung each launched expensive campaigns for their newest smartphone models.  By contrast, spending from both wireless and television service providers dipped slightly.

Personal Care Product expenditures increased for the third consecutive year and finished 2012 at $6,836 million, up 5 percent. The Restaurants category rang up $6,185 million of media spending, an increase of 5 percent, as marketers continued to rely on advertising to help drive sales increases in an extremely competitive environment.

Media expenditures for Financial Services fell 2 percent to $7,889 million. Weakness in ad budgets for credit cards and retail banking blunted higher spending on retirement products and consumer lending.

Top Ten Advertising Categories of 2012