Yesterday I mentioned a surge in local advertising, particularly the paid search genre that is most accessible to startups. Today I went back and fished out a press release from earlier this month that shows overall U.S. ad spending up 4.5 percent, led by above-trend growth in cable TV and the Internet. I will also point to a summary of the acquisition binge (big media buy new media) underway if further proof is needed that the money is flowing.
Before I go into the new material, let me add one thought from the Borrell Associates report that was the basis for yesterday’s local ad bit. “The biggest growth in online advertising is the one that most local site operators (I think this means newspaper websites) cannot even offer: Local paid search. Spending by local businesses on paid search is expected to rise 161 percent next year, to $906 million.”
Zooming out to the national level, TNS Media Intelligence in New York reported first half ad spending growth of 4.5 percent in the United States. This followed first quarter growth of 4.4 percent, meaning the momentum continued. Of course that was before Hurricane Katrina struck New Orleans which could blunt spending in the second half of 2005.
In any event, when TNS looked in the rear-view mirror it found local magazine (at $200 million, just a tiny fraction of the $70.5 billion first half ad spend) grew 24.4 percent. More meaningful was the 15.3 percent growth in the nearly $8 billion cable TV category. Internet advertising reached just under $4 billion in the first half, a 9.4 percent growth rate compared to the first half of 2004. The $10.5 billion consumer magazine sector posted 9.1 percent growth. So spending was strong and what strikes me is that the greatest growth occurred in niche-specific media: cable, consumer magazines, Internet and local magazines.
A second chart on the TNS site also provided breakdowns on spending by type of advertiser, a category dominated by automotive.
For sale: CNNMoney commentator Paul R. LaMonica states the obvious when he writes “round and round the Internet merger wheel goes. Where it stops nobody knows,” in a piece recapping some of the recently announced deals and speculating about which firms may be on deck. LaMonica quotes mutual fund manager Allison Thacker as saying, “There is a sense of hysteria among media companies so I don’t think we’re nearly at the end of consolidation.” Can big media buy admission to the future, or will the corporate digestion juices poison initiative at the young entities they acquire? We can only conjecture. But in this process of fusion, large amounts of money are being thrown off, which sets up a chain reaction by putting cash in the hands of entrepreneurs who go out and launch new things. Venture capitalistsalso see the acquisitive big media as providing them an “exit strategy” for short term investments. A critical mass is building in new media.
Aggregate me: A MediaPost article says “CNN and Time Inc. will next January merge their business and finance media properties under the CNNMoney.com flag … Ads will be sold on the site by a joint sales team.” The idea is to gather traffic to build audience numbers. MediaPost says that if the CNN-Time fusion had been in effect in July, the uber-site would have had 9.2 million unique visitors. Other big names in that space would be MSN Money, with 10.4 million unique July visitors, and Yahoo! Finance with 11.9 million.
Tom Abate
MiniMediaGuy
Cause if you ain’t Mass Media, you’re Mini Media