Direct Response Rare Bright Spot In Nielsen Report

Spending on direct response product advertising rose by 9.2% during 2008, representing one of a very few categories to show increases in The Nielsen Company’s ad expenditures report. Overall U.S. ad expenditures declined almost $3.7 billion to a total spend of $136.8 billion in 2008.

At $2.58 billion, up from $2.36 billion in 2007, direct response product advertising joined quick service restaurants as the only categories to experience spending gains in 2008. Seven of the top 10, including automotive (factory and dealer association) (down 15.5%) ; pharmaceutical (off 18.4%); local auto dealerships (down 8.8%); department stores (off 2.6%); wireless telephone services (down 8%); motion pictures (down 11.4%); and furniture stores (down 3.4%), all experienced declines. Restaurant ad spending was flat with 2007’s level.

These spending calculations did not include business to business or Internet spending, according to Nielsen.

The growth in direct response spending was led by increased spending from companies such as Video Professor (+389%), Allstar Marketing (+318%) and Rosetta Stone (+73%), according to Nielsen.

Nielsen lists direct response product ad spending, but did not include many direct channels among its mediums in its current report.

Internet spending, which according to Nielsen encompasses only CPM-based, image-based advertising, dropped by 6.4%. Nielsen’s calculations do not include paid search advertising; text only; paid fee services; performance-based campaigns; sponsorships; barters; in-stream ("pre-rolls") players; messenger applications; partnership advertising; promotions; email campaigns; or house advertising activity.

Hispanic cable TV, with a 9.6% gain and cable TV (up 7.8%) were the only two media to show ad growth in 2008. Cable was the highest revenue-generating medium with $26.6 billion in sales. The other channels include spot TV Top 100 (down 0.3%); syndication TV (down 0.8%); network TV (off 3.3%); broadcast TV (down 3.5%); local magazine (down 3.7%); spot radio (down 4%); spot TV (down 4.6%); outdoor ads (down 5%); FSI coupons (down 5.2%); national magazine ads (down 7.6%); national newspaper ads (down 9.6%); business to business spending (down 9.7%); local newspaper spending (down 10.2%) and local Sunday supplements (down 11%)

"Given the state of the U.S. economy, a decline in ad spending was expected, but it's not as bad as it could have been," said Annie Touliatos, VP of sales development for Monitor-Plus, Nielsen's ad tracking service, in a statement. "The campaign season and the summer Olympics were two big events that had a tremendous impact on advertising, especially on TV buys."

The Observer’s Take: The two growth areas within the product categories, direct response products and quick service restaurants, represent comparatively low-cost “trade-down” indulgences. Trade down? In the case of quick-service restaurants, these replace finer dining while still allowing a meal out. Similarly, direct response product ads probably benefitted from the high gas prices of summer 2008, which held back in-person spending. But why didn’t movies, a comparatively inexpensive source of entertainment, benefit from this phenomenon? Primarily because the trade-down from movies is Netflix and other in-home sources of entertainment. The two top movies of 2008 – Batman: The Dark Night and Iron Man – were in-theater events, and pulled quite nicely. But in terms of box office, the seventh-most-popular movie of 2008 would not have cracked 2007’s top 10 list. Where’s Harry Potter when you really need him?