Total ad spend in Q3 declined 1.9% from a year ago and finished the period at $34.0 billion, according to new Kantar Media data. For the YTD period of January through September, total spending increased 0.7% to $102.5 billion.
Local Radio, despite the headwinds from lower political ad spend, saw only a 0.4% gain in total spend. Spending on National Spot Radio fell 8.5% on cutbacks by restaurant, retail and financial service advertisers. Network Radio expenditures plunged 23.7% but the decline was exaggerated by a reduction in radio programming tracked by Kantar.
Without the benefit of the Olympics, Network TV expenditures in the third quarter fell 17.9% compared to a year ago. Spot TV dropped 15.0%, primarily due to the reduction in political category spending that occurs in odd-numbered years. Other television segments had healthy gains in Q3. Spanish Language TV ad expenditures rose 9.9%, principally from more hours of soccer programming on Hispanic networks. Spending on Cable TV networks was up 5.1% and continues to be lifted by a creeping expansion of ad time.
“Comparisons against Q3 of 2012 are skewed by last year’s record-breaking Summer Olympic and political campaign ad spending, which artificially boosted the market,” said Jon Swallen, Chief Research Officer at Kantar Media North America. “Remove that incremental money from the year-ago base and spending in Q3 2013 was up 2.5 to 3.0%. This is more indicative of how the ad market is currently performing.”
Spending for Internet display advertising, which does not include video or mobile ad formats, grew 14.5% in the quarter on broad gains from the financial service, telecom and technology categories. Outdoor advertising expenditures rose 5.5%, the sixteenth consecutive quarter of year-over-year increases. The medium is benefitting from digital signage, which allows multiple advertisers to share a single space and enables operators to command higher prices.
Magazine media had mixed results in third quarter, depending on the segment. On the positive side, Consumer Magazine expenditures increased 5.5% on higher activity from consumer package goods and apparel marketers. Ad pages grew a scant 0.3%. On the down side, spending in Sunday Magazines declined 4.0% but this is explained by a calendar quirk: there were thirteen Sundays in Q3 2013 as compared to fourteen the prior year. Meanwhile, B-to-B Magazines (-0.7%) and Local Magazines (-0.1%) each fell by a small amount.
The persistent and steady contraction of Newspaper media continued in Q3 of 2013. Expenditures in Local Newspapers dropped 3.2% and National Newspapers were down 6.4% on commensurate declines in the volume of ad space sold, indicating weak demand. For both segments the spending reductions were led by the automotive, retail and financial service categories.
Spend among the ten largest advertisers for the first nine months of 2013 was $11,805.0 million, a 6.4% increase compared to a year ago. Among the Top 100 marketers, a diversified group accounting for more than two-fifths of all measured ad expenditures, budgets rose 3.3%.
Procter & Gamble was the top-ranked advertiser in the January-September period, with measured expenditures of $2,390.7 million, an increase of 15.6%. The spending hikes were broadly distributed across its brand portfolio.
AT&T was the second largest advertiser, lifting its year-to-date ad budgets by 21.5% to $1,398.4 million. In addition to higher spending on wireless services, AT&T nearly doubled its marketing support for the U-Verse brand and this accounted for a majority of the overall increase. Rival Verizon Communications reduced its total expenditures by 15.4%, to $865.4 million. The spending gap between the two telecom giants is now at its widest margin in a decade.
Pfizer posted the largest growth rate among the Top Ten, with spending up 31.4% to $862.6 million. The company undertook expensive marketing launches for two new prescription medications while also boosting ad support for many existing Rx brands.
Two automakers are on the Top Ten list. General Motors had expenditures of $1,204.1 million, up 3.7% versus a year ago. The company has recently been shifting budgets towards pickup truck models, most notably to promote redesigns of the Chevy Silverado and GMC Sierra. Toyota spent $920.4 million in the nine month period, a decrease of 1.0%. Marketing re-launches of the Toyota Avalon and Rav-4 models were accompanied by sizable budgets but this was offset by reduced spending for several other top-selling Toyota models in advance of their own upcoming redesigns.
L’Oreal expenditures reached $1,157.7 million in the nine month period, up 10.9%. The marketer has now increased its year-over-year ad spending for fifteen consecutive quarters. Berkshire Hathaway entered the Top Ten rankings by spending $868.0 million, a 3.3% increase. The company raised spending at its Geico insurance subsidiary to keep pace with competitors.
Spend for the ten largest categories grew 1.1% in the first nine months of 2013 to $64,311.9 million.
Automotive was the top category in the period with expenditures of $10,991.3 million, up 2.3%. Manufacturer spending rose 1.1% while auto dealers spent 3.9% more. The strong sales climate for vehicles coupled with a steady flow of marketing launches for new and redesigned models continues to push auto spending higher.
Retail was the second largest category. Expenditures totaled $10,929.0 million, a 0.8% decline. Cutbacks among apparel and consumer electronics retailers more than offset robust spending by mass merchandisers.
Telecom had the highest growth rate among the leading categories as year-to-date spending rose 11.7% to $6,905.1 million. The wireless device segment was responsible for more than one-half of category dollar growth and was driven by an extraordinary number of smartphone product launches, backed by generous ad budgets.
Fierce competition among auto insurers helped spending in the Insurance category advance by 6.0% to $3,681.6 million. The impact of the Affordable Care Act on the ad budgets of health insurers remained modest through the end of September.
Advertising expenditures in the Restaurant category were $4,934.8 million in the period, an increase of 5.5% over the prior year. Industry traffic and sales growth remained sluggish and this put pressure on marketers to try and increase share of voice in an effort to hold market share.
YTD ad expenditures on Financial Services fell 7.1% to $5,526.5 million. Declines were prevalent across credit cards, banking, investment products and retirement products. Thirteen of the top fifteen advertisers in the category reduced their spending, further evidence of the widespread slowdown.