Overall Ad Spending Is Down In 2007

Implications: Viewer-ship is down at the broadcast TV networks.   The new Nielsen ratings system may have an equalizing effect on the flight of ad dollars from broadcast to cable TV.

Analysis: For the first time since 2001, advertising expenditures have deteriorated for two quarters in a row. Ad spending is down from 2006 levels, especially across traditional media: broadcast TV, newspaper and radio. Total advertising spend has dropped 0.3 % in the first half of 2007 to $72.6 billion as compared to the first half of 2006. Moreover, with the uncertainties of near term economic growth and consumer spending it is expected that ad expenditures will continue to weaken through the second half of the year.

Viewer-ship is down on the broadcast TV networks as the cable networks continue to consume the broadcast networks’ audience. For the week ended Sept. 2, 2007, Nielsen registered a 20-year low in ratings among the highly desired 18-49-year-old bracket for NBC, Fox and ABC. As such, network TV is being impacted as advertising income has dropped 3.6% to $11.8 billion since the first half of 2006 and in response, cable TV adverting income has risen by 2.8% to reach $8.4 billion for the same period.

Interestingly, the new Nielsen ratings system may have an equalizing effect on the flight of ad dollars from broadcast to cable TV.