“Total advertising expenditures continue to expand slowly. Excluding the cyclical contributions from special events such as political elections and the Olympics, core growth is tracking in the range of 3 percent,” said Steven Fredericks, president and CEO of TNS Media Intelligence. “In the near-term, we foresee no significant changes to underlying fundamentals that would move the overall ad market onto a different track. Our most recent forecast of 2.6 percent growth for 2007, while conservative, still seems appropriate.”

Ad Spending By Media
Internet display advertising registered a 17.3 percent increase to $9.76 billion as marketers continued to shift budgets towards targeted, digital media. Spot TV, boosted by record-setting levels of political advertising, was up 10.4 percent for 2006 to $17.23 billion. In the fourth quarter, which contained the last five weeks leading up to Election Day, Spot TV expenditures jumped 20.7 percent.

Performance in other parts of the TV marketplace was muted by a second-half slowdown. Network TV finished 2006 with $22.88 billion in expenditures, an improvement of just 2.5 percent against 2005. Cable Network ad spending rose 3.4 percent to $16.75 billion. Syndication was virtually flat at $4.24 billion.

Radio experienced a fourth quarter uptick and moved into positive growth territory for the year with $11.05 billion in spending, a rise of 0.3 percent. Softening ad page counts for Consumer Magazines trimmed revenue growth to 4.6 percent, at $23.19 billion for 2006. Local Newspapers saw expenditures for their print editions fall by 3.3 percent to $24.06 billion.

Advertising Spending by Media: Full Year 2006 vs. Full Year 2005¹

Share of Spending By Media
Full year performance followed the same core patterns observed in recent quarters. Internet display advertising continues to increase its share, accounting for 6.5 percent of total ad spending, up from 5.8 percent a year ago. Television gained 0.5 share points on the cyclical surge in local market political advertising. Newspapers lost 1.2 share points during 2006 and finished at 18.7 percent of expenditures.

Share of Advertising Spending by Media:
Full Year 2006 vs. Full Year 2005

Ad Spending by Advertiser
The top 10 advertisers of 2006 spent a combined $18.73 billion, a reduction of 2.8 percent versus the prior year period as robust gains from leading telecommunications companies failed to offset automotive category cutbacks. Across the top 50 companies, which are a more diversified group of marketers, expenditures were down 1.5 percent. Beyond the top 50, a segment that accounts for approximately two-thirds of the ad market, spending advanced a crisp 6.9 percent during 2006.

Procter & Gamble (P&G) maintained its spot atop the rankings with $3.34 billion in spending, up 3.3 percent versus last year. In contrast, Johnson & Johnson reduced its advertising budgets by 19.8 percent and fell from the fourth position to ninth position in the rankings.

General Motors (GM) barely held onto the number two spot and finished the year with $2.29 billion in spending, a reduction of $710 million or 23.7 percent decrease versus 2005. To put this in perspective, only 29 advertisers spent more than $710 million in 2006. A year ago, GM was the second largest advertiser behind P&G by just $220 million. The gap between the two advertisers is now more than $1 billion.

Elsewhere in the auto industry, DaimlerChrysler reduced its advertising by 10.7 percent, to $1.42 billion while Ford Motor Company, despite flat budgets in the fourth quarter, increased its full year outlays by 8.5 percent to $1.70 billion.

Telecommunications companies continued their vigorous spending with AT&T up 30.8 percent to $2.20 billion and Verizon Communications up 10.4 percent to $1.94 billion.

Top Ten Advertisers: Full Year 2006 vs. Full Year 2005⁸

Ad Spending by Category
Although its fourth quarter spending rate eased, Telecommunications was the top spending category in 2006 at $9.43 billion, finishing at a gain of 10.3 percent. Nearly half of the sector increase was attributable to AT&T. The intense competition in this arena is reflected in the double-digit growth rates of ad budgets at nearly all the key companies including AT&T, Verizon, Comcast, Deutsche Telekom and Vonage.

Foreign Auto claimed the second spot at $8.73 billion, a drop of 1.2 percent from 2005. Higher levels of factory and dealer ad spend behind the Toyota brand were offset by large reductions at Nissan and Volkswagen. Domestic Auto expenditures tumbled 11.7 percent to $7.62 billion due to General Motors and DaimlerChrysler cutbacks, pushing the category down to the number six position. Automotive advertising has now declined for six consecutive quarters.

The highest growth rate among the top 10 categories was registered by Pharmaceuticals which jumped 13.8 percent to $5.29 billion. This was due to the strength of Merck’s marketing launch of an HPV vaccine and increased advertising activity at Pfizer and Astrazeneca.

Local Services & Amusements continued to expand, up 10.3 percent to $8.69 billion. This segment is a diversified mix of small advertisers outside the Top 500 rankings whose collective size and multi-media budgets have made it an important contributor to the overall advertising economy.

Financial Services (+2.0%) and Personal Care Products (+1.1%) eked out small gains.

Top Ten Advertising Categories: Full Year 2006 vs. Full Year 2005⁹

Branded Entertainment
TNS Media Intelligence continuously monitors Branded Entertainment within network prime time and late night programming. The tracking identifies Brand Appearances and measures their duration and attributes. Given the short length of many Brand Appearances, duration is a more relevant metric than a count of occurrences for quantifying and comparing the gross amount of brand activity that viewers are potentially exposed to in the program versus in the commercial breaks.

In the fourth quarter of 2006, an average hour of monitored prime time network programming contained 5 minutes, 10 seconds (5:10) of in-show Brand Appearances and 18:11 of commercial messages. The combined total of 23:21 of marketing content represents 39 percent of a prime time hour.

Unscripted reality programming had an average of 8:55 per hour of Brand Appearances as compared to just 2:34 per hour for scripted programs such as sitcoms and dramas. Late night network talk shows had even higher levels, averaging 10:17 per hour. The combined load of Brand Appearances and paid ad messages in these shows approached 33 minutes per hour, or 55 percent of total content time.

Brand Appearances vs. Advertising: Q4 2006
(minutes:seconds per hour)

About TNS Media Intelligence
Established in 23 countries with more than 16,000 customers, TNS Media Intelligence is part of the TNS Group, ranked #2 worldwide in marketing information. TNS Media Intelligence monitors 3 million brands worldwide across a multitude of media, including TV, radio, print, Internet, cinema and outdoor. The company offers a full range of insights and analyses, including the tracking of advertising expenditures and advertising creative, as well as news monitoring and sports sponsorship evaluation.
In the US, TNS Media Intelligence is the leading provider of strategic advertising intelligence to advertising agencies, advertisers, and media properties. The company's tracking technologies collect advertising expenditure and occurrence data, as well as select creative executions, for more than 2.4 million brands across 20 media in North America. The U.S. headquarters are in New York City with sales locations in major markets throughout the United States. www.tns-mi.com

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