TV ad market takes a tumble

Sales decline for two consecutive quarters

Television advertising slipped 2.4% in the first half of 2007, and the ad market declined for two consecutive quarters for the first time since 2001, according to TNS Media Intelligence.

TNS issued its six-month advertising report card on Tuesday marked by weakness in television, which accounts for nearly 44% of all ad spending in the U.S. Overall, the ad market slipped 0.3% over the first half of 2007 to $72.6 billion from $72.8 billion a year ago.

Network TV was off 3.6% in the first half of 2007; local TV was down 5.4%; and syndication down 5.3%; and Spanish language down 1.2%. Cable TV was up 2.8%.

The first quarter of 2007 was expected to be slow compared to 2006 due to the impact of the Winter Olympics. But the second quarter was equally weak, which TNS attributed to lower corporate profits and slow retail sales. The last time media endured a two-quarter decline was in 2001 when advertising fell for four consecutive quarters.

“What we’ve seen through the first half is a continued slowdown in the rate of growth of company profits and retail sales,” said TNS SVP of research, Jon Swallen.

Hard hit are some of the biggest national advertisers, including the automakers, department stores, big-box retailers, media, and the home improvement sector.

General Motors led the ad spend decline, reducing its spending by 25.1%; Time Warner reduced its ad spending 7.9% and Walt Disney Co. lowered its spending 2.6% over the first half of 2007.

The bright spot on the horizon for local TV is political spending, which will start pouring into some local markets in the early primary states in the fourth quarter of 2007.

“Impact of political is concentrated in spot television in select markets; it’s not a rising tide that lifts all boats,” Swallen said.

In addition to TV, newspapers were hard-hit, declining 5.8% over the first half of 2007. Internet advertising grew 17.7% to $5.5 billion, and advertising in consumer magazines rose 6.9% to $11.5 billion.

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