2007 Media Economy Stronger than TNS Ad Spending Data Reports. JackMyers Think Tank

Time Warner, Viacom, News Corp, Google, Microsoft, CBS, GE and NBCU, Disney, WPP, Omnicom, Publicis, IPG, and all public companies and investors in the media and advertising sector: this is for you. I regret acting like the petulant media economist who insists the sky is not actually falling and that the other guys got it all wrong. But it is critically vital for Wall Street, marketers and media companies to realize that 2007 advertising spending was much better than was reported last week by media researcher TNS Media Intelligence. TNS reported only 0.2% growth in ad spending for 2007 compared to 2006. In fact, incorporating TNS spending data, JackMyers Media Business Report has determined that actual ad industry growth for 2007 was 1.9 percent and could actually have been as high as 3.1 percent. While not exactly robust, actual 2007 industry performance met expectations and the doom and gloom scenario is not quite as serious as suggested by the TNS data.

TNS includes only six traditional media in their analyses, compared to twelve media types included in the analyses of Universal McCann forecaster Bob Coen and eighteen media types analyzed by JackMyers Media Business Report. TNS also includes newspaper free standing inserts, which are considered coupon inserts and are typically incorporated into consumer sales promotion data rather than advertising spending data.

TNS cautiously uses the qualifier "measured media" to describe its analyses and they publish insightful data on year-to-year spending by major national advertisers and advertising categories. But TNS' conclusion that "the advertising market continued to sputter at the end of 2007" does not account for the positive growth of emerging media and therefore misrepresents the true economic picture.

The TNS data is accurate for year-to-year comparisons of measured media, but because the company tracks only television, magazines, newspapers, Internet, radio and outdoor, they are providing at best misleading and at worst destructive press releases that fail to acknowledge the significant spending shifts moving from these traditional media into videogames, cinema, satellite radio, digital out-of-home, custom publishing and mobile. (TNS also does not include the declining Yellow Pages category in their spending analyses.)

While TNS is the most factual reporter of advertising spending for purely comparative analyses of measured media, the company is not necessarily seeking to present accurate insights on the real media world of 2008. TNS does not track most of the leading edge industry growth categories, including videogame advertising (+90%), mobile advertising (+80%), satellite radio (+160%), branded entertainment and product placement (+26%), and custom publishing (+20%). These categories combined for 13.5% of total ad spending in 2007 (based on TNS data for six measured media plus additional JackMyers categories). Because emerging media do not fit in with TNS' methodology for capturing actual ad placements and insertions, they are simply excluded from the reports. Yet TNS reports are interpreted by trade publications and Wall Street analysts as factual representations of the economic climate of the industry.

Compounding the issue is the basic methodology used by TNS to determine relevant data for their media analyses. Internet spending data, advises TNS, is based on display advertising and does not include paid search or broadband video advertising. Since video is the fastest growing sector of online advertising, the failure to incorporate it distorts the actual picture of industry vitality. This will become even more a concern as video advertising grows in the next several years.

TNS data also appears to exclude classified newspaper advertising and overstates broadcast network revenues, includes only 34 radio markets, understates local and national spot television revenues and overstates consumer magazine revenues. The inconsistencies between TNS and other published reports from industry economists and trade associations may be the result of TNS self-limiting access to full national data on local broadcast media and from the use of published rate cards rather than actual negotiated prices for several major media.

On an adjusted basis, based on published data from multiple forecasters and trade associations plus our own economic analyses, JackMyers Media Business Report estimates that actual ad spending growth in 2007 for eighteen media categories was between 2.2 and 3.1 percent, dramatically greater than TNS' 0.2 percent. (See our detailed ad and marketing spending estimates at JackMyers.com.) Full data will be provided later in 2008 when additional information is available.

Financial, business and advertising trade publications and websites picked up TNS data as factual evidence of an economic recession in the ad business without providing detailed analysis and appropriate disclaimers, which TNS provides but does not emphasize. This is an egregious problem for the industry that should be immediately corrected, if not in trade publications then certainly in media and ad industry communications with the investment community.

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