The U.S. market, which faced six straight quarters of declines in ad spending, has seen a turnaround in 2010. In total, advertisers spent an estimated $54 billion during the first half of 2010. The increase in U.S. advertising reflects a modest improvement in U.S. consumer confidence in the first half of the year, as advertisers look to highlight value deals and increase promotions in the hopes of spurring consumer spending.

However, with confidence still well below pre-recessionary levels, automotive was one of only a few bright spots in the top 10 product category ad spending.

Overall, there was a 3 percent increase in the top 10 product categories, with the largest growth by far seen in automotive (+27%) and auto insurance (+23%). The automotive advertising was driven largely by increased spending by General Motors which was up 73% over 1H09. Ford and Toyota also grew their ad spending by 15% and 22% respectively. An increase of 82% for UAW Health Care Trust contributed to the first half growth in the auto insurance category. All other categories, except department stores (+5%) and restaurants (+2%) showed declines in the first six months of the year.

“Not surprisingly, auto ad spending is closely tied to auto sales given that those sales dollars enable increased marketing expenditures,” said Sallie Hirsch, SVP of Research for Nielsen’s automotive unit. “Last year was abysmal for the auto industry as economic factors drove down sales to very low levels. Now that we’re seeing an improvement in the market and consumers are more willing to open their wallets, car sales have started to rebound and that’s what’s driving the increase in ad spending for 2010.”

Looking at ad spending across media types, U.S. television (network, cable, syndication, spot, Spanish Language network and Spanish Language cable) continues to dominate, accounting for $33.8 billion in advertising during the 1H10, a 6 percent increase over last year. Spanish language network TV and Cable TV in particular saw the biggest gains, up 24 percent and 13 percent respectively over 1H09.

Print media overall (national and local magazines, newspapers, Sunday supplements and B2B) was flat, however, national Sunday supplements received a significant uptick with 21.6 percent growth over last year. National newspapers were also up 10.8 percent. Alternatively, B2B and local Sunday supplements declined 19.2 percent and 12.1 percent respectively.

The automotive industry was hit by a Mack truck the second half of 2008 with all-time high gas prices, a shrinking economy and growing consumer fear of making a large purchase.  Advertising spend reflects how the automotive industry reacted to the crisis, highlighting channels that are the most vital to intercepting new vehicle prospects.

The first half of 2008 showed growth in advertising spend over 2007 for TV (+2%) and Internet (+55%) while outdoor, magazine, radio and paper decreased (20%, 18%, 14%, and 4%, respectively).  The second half of 2008 yielded a lower advertising spend over 2007 across all channels.  Radio and paper took the biggest hits with decreases of 42 percent and 40 percent, while Internet exhibited a similar level of spend vs. 2007 with only a 0.5 percent decrease.  Overall automotive advertising spend decreased 8.2 percent from 2007 to 2008, with the Internet being the only channel to witness growth.

Automotive Estimated Ad Spend: 2007 – 2008

Trended on a monthly basis, automotive Internet advertising was outpacing 2007 until October 2008 when the brakes were applied and it dipped below 2007 levels for the first time.  Automotive Internet spending in 2007 represented 4.6 percent of total Internet spend rising to 5.9 percent in 2008.  Acura, Hyundai and Subaru contributed the largest increase in Internet spend from 2007 to 2008 while Mercury, Volvo and Jeep had the largest decrease.  Thus far, Internet spend for 2009 is once again gaining momentum and is forecast to be on par with Q1 07 while still slightly below Q1 08.

Auto Internet Ad Spend As % Of Total Internet Spend

The Internet is proving to be a critical strategic channel for automakers and we anticipate the trend to continue.  Although TV continues to represent roughly three-quarters of total advertising spend, the Internet could likely become the second largest advertising channel by 2010.  The key to successful Internet spend in 2009 will be identifying where your target audience goes online and interjecting yourself at the right moment in the vehicle purchase funnel.

Despite a continued softening of the economy, several media showed healthy growth in advertising for the first half.  Advertising on Cable TV (+8.1%), Syndication TV (+7.2%), and National Sunday Supplements (+7.2%) saw the largest growth, according to Nielsen.  Spot Radio fared worst among the 19 media categories analyzed by Nielsen (-10.1%). 

Although overall Internet ad spending, when including paid search and online video advertising, was up by 11% during the first half of this year, image-based Internet advertising declined by 6% during the first half of 2008, compared to the same period in 2007.

Among specific product categories, Credit Card Services (+18.95%) and Direct Response Products (+20.48%) showed the strongest ad spending gains, while the Automotive (-.01%), Pharmaceutical (-4.76%), and Motion Picture (-4.64%) categories recorded the largest advertising declines.

The decrease in image-based Internet advertising was driven by a 27% drop in online ad spending by financial services companies, which decreased their spending from $1.5 billion in the first half of 2007 to $1.1 billion during the first two quarters of this year. 

Other industries — entertainment (+47%), automotive (+45%), and consumer goods (+32%) — showed strong increases in image-based online advertising during the first half of 2008.

View the full press release.

View Nielsen Online’s report on first half 2008 online ad spending.

Read coverage of Nielsen’s findings in Wired, Investment News, the Financial Times, Crain’s New York Business, TV Week, Broadcasting & Cable, MediaPost, The Hollywood Reporter, Adweek, and Mediaweek.