U.S. ad spending in record fall in early '09: study

By Paul Thomasch

NEW YORK (Reuters) - U.S. advertising spending in the first three months of this year crashed 14 percent, according to a leading industry researcher on Wednesday, the biggest drop since 2000 when it began keeping records.

The figures from TNS Media Intelligence are the latest to highlight the sharp downturn in advertising spending as companies have been forced into budget cutbacks. The drop surpassed a 9 percent slide in the fourth quarter.

Earlier this week, figures from Nielsen Media showed a 12 percent drop in first quarter spending.

Taken together, the numbers point to an advertising downturn that is far worse than many expected. They also suggest that a recovery in the media business may still be some time off.

"While there are hopeful signs of general economic indicators bottoming out, the advertising sector still appears to be lagging behind," TNS Media Intelligence senior vice president of research Jon Swallen said in a statement. "Available data from (the) second quarter shows ad expenditures tracking on a comparable plane to recent months."

If that is the case, it would undermine suggestions from some industry insiders that the worst of the ad downturn is over. Indeed, a number of media company chief executives -- including Viacom Inc's Philippe Dauman and CBS Corp's Les Moonves -- have recently said that sentiment among advertisers is improving.

One of the major obstacles facing the advertising industry for the remainder of the year is the bankruptcies of General Motors and Chrysler, two key U.S. marketers whose budgets are now in question.

In the first quarter, TNS data shows that spending in the automotive category fell 28 percent from the prior year. The bankruptcies and closure of dealerships make it unclear how spending will track over the coming months.

Spending by financial services and retail companies also fell sharply, both down 18 percent, according to the data.

Procter & Gamble, though it cut spending by 18 percent, remained the biggest advertiser in the quarter, shelling out $674 million. Verizon Communications Inc came in second, spending $577 million, up 3 percent, followed by AT&T Inc, spending $459 million, down 1.2 percent.

(Reporting by Paul Thomasch; Editing by Brian Moss)