Ad spending grew across all media last year with the biggest gains seen in Internet, radio and pay TV. Only conventional TV experienced a decline in spending between 2004 and 2005. ZenithOptimedia is projecting these trends in allocation of media dollars will continue through 2008. Ruth Klostermann, director of strategic resources for ZenithOptimedia in Toronto, says last year was one of the best sales years in recent memory for radio and outdoor. She says these media, along with the Internet, are benefiting most as advertisers increasingly embrace media mix strategies. The Internet is getting a bigger slice of the pie through ad spending as well as investments in Web site development and online marketing. The Institute of Communications and Advertising estimates that Internet-related spending now accounts for 4% of marketing budgets.

Klostermann says it is the strength of specialty/cable that has kept the TV total on the positive side of the column, and that mass media is even being outpaced by increased spending in trade and consumer promotion and direct marketing. Consequently, she adds, media increases will continue to amount to little more than inflation despite the economy’s strong performance. Conventional TV was down 4% in ad revenues while specialty/cable was up by 19%. Food and automotive spending were down but the retail, entertainment, restaurant and financial services categories continued to support TV with increased spending. Consumer magazines had a slow start in 2005 but with a strong fourth quarter ended the year with a 2.7% increase. That momentum has continued into 2006. A healthy retail market has helped community newspapers have much stronger revenue growth than dailies. For consumers, 2005 was a very good year, the best since 2000. Interest rates remained low despite consecutive increases, a tight labour market drove salary growth of 5.4%, and personal spending grew 4%. Employers also did very well, posting another in a string of double-digit increase in profits at 10.7%.

ZenithOptimedia expenditure forecasts to 2008

Source for 2004/05: TVB, Magazines Canada, Nielsen Media Research, IAB, Agency forecasts