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.

Total advertising expenditures in 2006 increased 4.1 percent to $149.6 billion as compared to 2005, according to data gathered by TNS Media Intelligence. Ad spending during the fourth quarter of 2006 was up by 4.2 percent against the same period in 2005.

“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.

1. Figures are based on the TNS Media Intelligence Stradegy™ multimedia ad expenditure database across all TNS MI measured media, including: Network TV; Spot TV; Cable TV (44 networks); Syndication TV; Hispanic Network TV; Consumer Magazines (212 publications);,Sunday Magazines (6 publications); Local Magazines (27 publications); Hispanic Magazines (26 publications); Business-to-Business Magazines (387 publications); Local Newspapers (145 publications); National Newspapers (3 publications); Hispanic Newspapers (54 publications); Network Radio; Spot Radio; Local Radio; Internet; and Outdoor. Figures do not include public service announcement (PSA) data.
2. Network TV figures include the CW and MyTV networks, both of which launched in Sept 2006.
3. Spot TV figures do not include Hispanic Spot TV data.
4. Local Radio includes expenditures for 34 markets in the U.S.
5. Internet figures do not include paid search advertising.
6. FSI data represents distribution costs only.
7. The sum of the individual media may differ from the total due to rounding.

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.

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.

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)