“Coming off a 5.3 percent gain in the first quarter that was aided by the Winter Olympics, the growth in total ad spending for the second quarter fell back more than expected and finished at 2.9 percent,” said Steven Fredericks, president and CEO of TNS Media Intelligence. “Pro-forma monthly expenditures, excluding the stimulus of special events such as the Olympics and World Cup, have been tracking steadily within a range of a 2 to 4 percent increase. Third and fourth quarter political spending will be incremental to this base, helping total year performance.”

Ad Spending By Media
Spanish Language Media, paced by an enormous surge in June ad spending associated with the World Cup event, rose 20.5 percent to $2.40 billion. Internet display advertising, riding five consecutive quarters of double-digit growth, rose 18.9 percent to $4.69 billion for the half-year.

Expenditures on Network TV advanced 5.7 percent in the first half to $12.28 billion. Excluding February, when the Winter Olympics were telecast, the medium was up 1.2 percent for the remainder of the first half. Consumer Magazines encountered softening demand during the second quarter and finished the half year with a 4.4 percent increase in spending, to $10.90 billion.

Local Newspapers, confronted with over $600 million in reduced automotive spending year-to-date, saw total expenditures erode by 3.9 percent to $11.65 billion. Radio media also lagged, down a combined 1.4 percent to an aggregate of $5.26 billion.

Advertising Spending by Media: First Half 2006 vs. First Half 2005¹

Source: TNS Media Intelligence
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 (220 publications);,Sunday Magazines (6 publications); Local Magazines (27 publications); Hispanic Magazines (31 publications); Business-to-Business Magazines (419 publications); Local Newspapers (143 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. Spot TV figures do not include Hispanic Spot TV data.
3. Internet figures do not include paid search advertising.
4. Local Radio includes expenditures for 34 markets in the U.S.
5. Spanish Language Media includes expenditures from Hispanic Network and Cable TV (Univision, Telemundo, Telefutura and Galavision); Hispanic Spot TV; Hispanic Magazines (35 publications); and Hispanic Newspapers (54 publications).
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
The Internet continues to grow its share of total advertising expenditures. For the first half of 2006, the Internet accounted for 6.4 percent of total ad spending, up from 5.6 percent a year ago. Newspapers lost 1.3 share points over this period, slipping to 18.6 percent of expenditures and falling behind magazines

Share of Advertising Spending by Media: First Half 2006 vs. First Half 2005⁸

Ad Spending by Advertiser
The top 10 advertisers in the first half of 2006 spent $9.29 billion, 0.6 percent less than the prior year period. Extending outwards to the top 50 advertisers, a group that accounts for one-third of total ad spending, expenditures fell 1.0 percent. Beyond the top 50, outlays advanced a healthy 6.8 percent, continuing a recent trend of middle-tier spenders lifting the overall ad market.

Procter & Gamble strengthened its grip on the top spot with $1.60 billion in spending, up 8.0 percent versus last year. Telecommunication companies continued their vigorous spending with AT&T up 32.9 percent to $1.18 billion and Verizon Communications up 13.3 percent to $948 million. Toyota Motor Corporation entered the top 10 with expenditures of $636 million.

General Motors pared its budgets by over $270 million in the second quarter and finished the half year at $1.29 billion, a 17.4 percent decrease. Johnson & Johnson reduced its expenditures by 21.3 percent and has now cut spending in four consecutive quarters. Declines were also registered at Time Warner (-13.5 percent), Walt Disney (-7.5 percent) and News Corp. (-8.1 percent). At each of these companies, the reductions came primarily from the movie divisions.

Top Ten Advertisers: First Half 2006 vs. First Half 2005⁹

Ad Spending by Category
The Telecommunications category maintained its top position with $4.70 billion in expenditures, up 16.6 percent. In addition to higher spending from AT&T and Verizon, aggressive marketing at Vonage and Deutsche Telekom also contributed to the gain.

Financial Services was the second largest category, growing 7.9 percent to $4.33 billion due to credit cards and investment brokers. Other categories posting strong results were Local Services & Amusements, up 11.8 percent to $4.26 billion, and Direct Response, up 7.4 percent to $3.16 billion.

Automotive, which occupied the top two spots in the rankings as recently as year end 2005, tumbled to the middle of the pack. Reductions were widespread among both factories and local dealers, pushing Foreign Auto advertising down 3.8 percent to $4.17 billion and Domestic Auto down 13.3 percent to $3.79 billion. Automotive advertising has declined in four consecutive quarters and the aggregate cutbacks during the past 12 months amount to $1.4 billion, or approximately 1 percent of total annual expenditures for all media.

Top Ten Advertising Categories: First Half 2006 vs. First Half 2005¹⁰

Among mid-size categories outside the top 10, robust growth was exhibited by Real Estate (+31.3 percent to $1.67 billion); Insurance (+20.9 percent to $1.60 billion); and Computer Products (+11.7 percent to $1.25 billion).

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 second quarter of 2006, an average hour of prime time network programming contained 2 minutes, 51 seconds (2:51) of in-show Brand Appearances and 18:12 of commercial messages. The combined total of 21:03 of marketing content represents 35 percent of a prime time hour.

Unscripted reality programming had an average of 7:04 per hour of Brand Appearances as compared to just 1:41 per hour for scripted entertainment programming, such as sitcoms and dramas. Late night network talk shows continue to have even higher levels, averaging 12:17 minutes per hour. The combined load of Brand Appearances and paid commercial messages in these shows exceeds 35 minutes per hour.

Brand Appearances vs. Advertising: Average Levels Q2 2006

About TNS Media Intelligence
TNS Media Intelligence is the leading provider of strategic advertising intelligence to advertising agencies, advertisers, and media properties. The company's tracking technologies collect advertising expenditure and occurrence data, as well as select creative executions, for more than 2.2 million brands across 20 media. Established in 23 countries with more than 16,000 customers, TNS MI is part of the TNS Group, ranked #2 worldwide in marketing information and the world’s largest custom research company. The U.S. headquarters are in New York City with sales locations in major markets throughout the United States.

About TNS
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