Ad spending slower than expected in 2007

NEW YORK (Reuters) - U.S. advertising spending is expected to grow this year at an even slower rate than previously forecast, as a sluggish economy has corporations scaling back budgets and looking for less expensive marketing choices, according to a new report.

Tracking firm TNS Media Intelligence issued a revised forecast for 2007 advertising spending in the United States on Tuesday, calling for it to rise 1.7 percent to $152.3 billion. Earlier this year, TNS had forecast growth of 2.6 percent.

“The advertising market has moved onto a slower track than we thought possible just six months ago,” Steven Fredericks, Chief Executive of TNS, said in a statement.

Along with a sluggish economy, weaker spending from key advertisers, including automakers and competition from other less expensive media outlets such as the Internet have also pressured spending.

Overall, spending growth this year will be the lowest since 2001, said Jon Swallen, director of research for TNS.

Calling this year “the ugly cousin,” Swallen pointed out that advertising spending rose 4.1 percent in 2006, 3 percent in 2005 and 9.8 percent in 2004, when spending was boosted by the Olympics and U.S. elections.

Similarly, 2008 is a year of the Olympics and U.S. elections, which could give a bounce to spending figures.

“Certainly those forces will override any short-term economic influences,” he said.

For now, Internet display advertising will post the sharpest rise in spending for 2007 at 16 percent, TNS said, as more marketers move spending to online media in an attempt to reach younger consumers.

TNS does not track search Internet advertising, which some advertising analysts believe is growing at an even faster rate.

Other areas of growth include cable television advertising, which is expected to be up 5.9 percent this year, and outdoor advertising, like billboards, where spending is due to be up 4.6 percent.

Newspapers and business-to-business magazine will be among the areas with the sharpest declines, with forecast drops of 2.9 percent and 1.5 percent, respectively.