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Capital Region Business Journal Article

Article Originally published in the Captial Region Business Journal - August 2010

Title: Media tracking firm reports increase in overall ad spending

By: Jonny Buroker

advertising spending on the rise

Kantar Media, a closely watched advertising media tracking firm, released a report in May that indicated advertising spending as a whole rose 5.1 percent in the first quarter of 2010 over the same quarter in 2009.  This marks the first jump in two years and is the largest quarterly increase since 2006.

Jon Swallen, senior vice president for research at Kantar Media, provided the following statement, “With the economy turning from recession towards growth, marketers appear to be more confident about a pickup in consumer activity and have increased ad budgets to support their brands.”

Significantly higher spending by marketing giants like Proctor & Gamble, AT&T and Pfizer, as well as a big bump in the ad budget of General Motors, helped fuel the increase, although companies of all sizes are jumping on the marketing bandwagon.

TV and internet

According to ZenithOptimedia, a leading media buyer, Television suffered less than other media during the economic downturn, with ad spend down 6.7 percent in 2009, because television viewing rises in a recession due to its cheap and absorbing nature.

ZenithOptimedia forecast that TV's share of the global ad market would rise to 40.6 percent in 2012 from 39.4 percent in 2009, thanks mainly to its dominance in developing markets.

The agency also forecast that newspapers' share of global ad expenditure would fall to 19.4 percent by 2012 from 23.1 percent in 2009 and that magazines would fall to 8.6 percent from 11.6 percent.

Internet ad spending, the biggest medium after TV and newspapers, should increase its share to 17.1 percent in 2012 from 12.6 percent in 2009, the agency said, adding that the downturn had likely sped up a shift away from traditional media.

U.s. online ad spending predicted to increase 10.8 percent in 2010

The improvement in the U.S. economy over the last several months is fueling a rebound in online ad spending according to a recent report from eMarketer.  The report forecasts that 2010 online ad spending in the U.S. will grow 10.8 percent over 2009 to reach $25.1 billion.  This was up from an earlier forecasted spending increase of 5.5 percent.  By 2014, U.S. online ad spending is expected to reach $36.3 billion, an increase of 60 percent over 2009!

The eMarketer report indicates that the uptick in the economy has had a twofold effect: more shopping by consumers, most readily seen in search ad expenditures, and a greater willingness among companies of all sizes to spend a bit more for marketing in general. That greater spending has also contributed to the ongoing shift of marketing dollars away from traditional media toward the Internet and other digital advertising."

Online ad spending

The top search engines like Google, Yahoo and Bing are still projected to collect 58.5 percent of all online ad spending this year, but eMarketer expects online video advertising to account for a third of the new incremental ad spending expected to surface between this year and 2014.

eMarketer provided this caveat, "Continued economic hurdles, combined with corporate qualms about a renewal of the recession set off by the EU's debt crisis, could put more of a damper than anticipated on spending by both companies and consumers."

reallocate your marketing budget

Given the recent upward trend in ad spending, and the even bigger increases in online ad spending over other forms of media, has your company evaluated how your marketing budget is being allocated? 

With the economic recovery still in doubt, it is more important than ever to spend your advertising dollars in areas that are going to provide your company with a positive return on investment. 

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