Souring U.S. economy crimps advertising, data shows

NEW YORK, March 25 (Reuters) - A souring U.S. economy put the brakes on advertising spending in 2007, as more than half of the top U.S. marketers cut their budgets from the previous year, according to data released on Tuesday.

TNS Media said U.S. advertising spending for the full year rose less than 1 percent to $148.99 billion after a fourth quarter when spending was essentially flat. The report said spending had showed no signs of picking up since then.

"As a whole, the ad market remains stalled and is being engulfed by the spreading pessimism about general economic conditions," Jon Swallen, TNS senior vice president of research, said in a statement.

"Fourth-quarter performance was indicative of this malaise and early figures from 2008 suggest the growth rate for measured ad spending has not appreciably changed," he added.

A year ago, the research company initially predicted advertising spending would rise 2.6 percent in 2007 after climbing 4.1 percent in 2006.

But concerns about U.S. consumer spending amid the credit crunch and housing downturn prompted corporate America to rethink advertising budgets.

Six of the 10 largest advertisers cut spending in 2007, including: General Motors GM.N, Time Warner (TWX.N), Ford (F.N), AT&T (T.N), Walt Disney (DIS.N) and News Corp NWSa.N.

Overall, Procter & Gamble (PG.N) again finished the year as the largest spender, at $3.49 billion, up 5.6 percent, TNS said.

The spending cuts took a toll nearly across the board, with advertising declines in television, newspapers, and radio.

Spending on Web display advertising and outdoor advertising like billboards salvaged the numbers, rising 15.9 percent and 4.9 percent respectively. TNS does not measure search advertising, which by many accounts is the fastest growing sector of advertising.

While TNS did not include a forecast for 2008, others like Universal McCann have predicted a 3.7 percent rise in advertising spending this year, thanks largely to the Olympics and the elections. (Reporting by Paul Thomasch, editing by Leslie Gevirtz)