TNS Media’s John Swallen says ad spending by telecommunications companies is up 9 percent from this time last year and, even better, “where the money is going is toward television.”
While overall media spending is down, at least one category of advertising — telecommunications — is not only up but also concentrating on broadcasting as well.
“Where the money is going is toward television,” John Swallen, TNS Media Intelligence’s SVP, research, said today.
Speaking at the Television Bureau of Advertising’s annual forecast conference in New York, Swallen said that ad spending by telecommunications companies is up 9 percent from this time last year.
That’s a marked contrast to figures for overall ad spending this year, Swallen said. Media spending is down 17 percent from last year; spot TV spending is down even further, having decreased by 27 percent, he said.
The increase in telecommunications spending is being driven by the industry’s fierce competition for increasingly savvy and cost-conscious consumers, Swallen said. The continued consolidation of the telecommunications companies, as well as their foray into a range of emerging technologies, increases the stakes even more, he said.
While television and newspapers used to share equally about 75 percent of the telecommunications ads, that no longer is the case, Swallen said. Today, about 45 percent of those ads go to television, he said.
Those gains, however, are not enough to offset the effects of a downturn in other major advertising categories, most notably auto and retail.
At an earlier conference session, Swallen addressed the dramatic loss of auto industry ad dollars — which dropped to $10 billion from $20 billion a year just five years ago.
Retail advertising is also dramatically down, he said. During the last four years, retailers have cut a collective 25 percent on advertising, he said. And spot TV receives just about 5 percent of what is being spent.
In addition, there is no immediate upturn in retail advertising on the horizon, he added. That, he said, is because certain segments of retail, particularly home improvements, lags behind the housing market, meaning that today ad sales are contracting faster than retail or home sales.
“Ad spending tends to lag in the economic cycle,” Swallen said. “The majority of ad spending tends to react to the marketplace rather than anticipate it,” he said.
In addition, the ad budgets of retailers such as department stores are being hit in more than one way. Sales that support advertising are down, he said. In addition, though, a lower percentage of those sells are being used to support advertising, he said.