TheStreet.com: Google Gains as Ads Slow
by Jonathan Berr
TheStreet.com Senior Writer
9/7/2006 7:17 AM EDT
Google (GOOG) , Yahoo! (YHOO) and other Internet companies are continuing to benefit from the shift of advertising dollars online, even as concerns about a possible economic slowdown intensify.
Internet advertising spending rose 18.9% to $4.69 billion between January and June, according to data from TNS Media Intelligence. That's greater than the 5.7% jump seen on network TV, the 4.4% jump at magazines or the 2.6% increase seen on cable, TNS says.
These figures underscore how the Web may grow even more important for advertisers in the coming months if worries about corporate profits continue. That's good news for Internet companies -- and possibly more bad news for the traditional media.
TNS also isn't sure whether its forecast for 4.9% total ad growth this year will pan out, even with record levels of political advertising because of the midterm elections, says Steven Fredericks, the company's chief executive, in an interview.
"The auto category in the past 12 months has cut spending by $1.4 billion, which represents about 1 full percentage point of the full ad market," he says. Fredericks adds that movie studios are "being besieged from a number of different directions," including the growth of Internet downloads.
TNS estimates that the top 10 advertisers reduced spending in the first half of the year by 0.6%, to $9.29 billion. Lighter spenders included General Motors (GM) , down 17% to $1.29 billion, and media giants Time Warner (TWX) , Walt Disney (DIS) and News Corp. (NWS) . Cutbacks in movie spending drove those reductions.
Procter & Gamble (PG) led the pack by spending $1.6 billion, up 8% from the same period a year ago, according to TNS Media Intelligence estimates. AT&T (T) placed third in latest-period spending, after P&G and GM, with $1.18 billion -- a 33% jump.
Overall, the outlook for advertising spending, which investors in media companies watch closely, isn't particularly encouraging. Last month, the U.S. Department of Labor said GDP growth slowed to 2.9% in the second quarter from the torrid pace of 5.6% in the first quarter.
Spanish-language media showed the biggest gains of any group because of the World Cup soccer tournament, gaining 20.5% to $2.4 billion. Newspapers, magazines and radio all showed declines, TNS says. |
