The Industry Forecast

The Industry Forecast TNS Media Intelligence AdWatch 2005 TNS Media Intelligence Advertising and Marketing Intelligence – Across Brand, Media, Industry and Market  Leading provider of strategic advertising and marketing information Monitoring:      $140+ billion in ad expenditures 190 million ad occurrences 2.2 million brands 19 media The Industry Forecast • The Advertising Landscape • Key Indicators for 2005 Spending Outlook for 2005 • The Advertising Landscape Annual Multi-Media Expenditure Trends   Healthy recovery since 2001 Modest start to 2005 Based on 15 media 2001-2002; 18 media 2003-2005 The Advertising Landscape Performance By Media – Q1 2005 $5.87 $5.85 $4.69 $3.66 $3.51 $1.95 $1.61 $1.23 $0.99 $0.92 $0.80 $0.73 $0.54 $0.40 $0.22 $0.10 LOCAL NEWSPAPERS UP .3% NETWORK TV UP 3.8% CONSUMER MAGAZINES UP 9.5% SPOT TV DOWN –4.8% CABLE TV UP 18.2% INTERNET UP 8.2% LOCAL RADIO UP 2.6% B2B MAGAZINES UP .1% SYNDICATION UP 4.2% HISPANIC MEDIA UP 5.8% NATIONAL NEWSPAPERS UP 2.3% OUTDOOR UP 2.9% SPOT RADIO UP 4.7% SUNDAY MAGAZINES UP 14.5% NETWORK RADIO DOWN –3.2% LOCAL MAGAZINES UP 26.2% Dollars in billions The Advertising Landscape Internet Advertising Spend The Advertising Landscape Internet Advertising Spend 2001 $ Billions* % Change vs. Previous Year $5.81 2002 $5.21 -10.3% 2003 $6.13 +17.6% 2004 $7.44 +21.4% Q1/2005 $1.95 +8.2% * Note: Does not include paid search advertising The Advertising Landscape Internet Advertising Spend Internet Share of Ad Spend Has Recovered To 2001 Levels * Q1/2005 is a seasonally adjusted annual rate The Advertising Landscape Internet Advertising Spend % Share of Total Internet Ad Spend 60.0% $4.2 B 55.0% $3.0 B 50.0% 45.0% $2.8 B $3.2 B 40.0% 2001 2002 Dot Coms 2003 Non Dot Coms 2004 The Advertising Landscape Internet Advertising Spend Internet's Share of Total Ad Spend Among Non-Dot Com Brands 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2001 2002 2003 Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05 2.7% 2.2% 1.6% 1.8% 2.9% 2.6% 3.0% 2.7% Top 50 Advertisers The Advertising Landscape Internet Advertising Spend Internet's Share of Total Ad Spend Among Non-Dot Dom Brands 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2001 2002 2003 Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05 3.6% 3.0% 2.5% 2.7% 2.2% 1.6% 1.8% 2.9% 2.6% 3.2% 2.8% 3.3% 2.8% 3.0% 2.7% 3.2% Top 50 Advertisers All Others The Advertising Landscape Hispanic Media Advertising Spend The Advertising Landscape Hispanic Media  The   nation’s largest minority: Current: 13% share of U.S. population (39 million) Estimated: 24% share of U.S. population in 2050 (102.6 million) Estimated 61% growth between now and 2050  The Advertising Landscape Hispanic Media  3 TV Networks (Telemundo, Telefutura, Univision) 1 Cable Network (Galavision)      43 Local TV Stations 40 Magazines 62 Newspapers 16 Websites The Advertising Landscape Hispanic Media The Advertising Landscape Hispanic Media – Top 500 Advertisers % Of TV and Print Spending Allocated To Hispanic Media 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2001 2002 2003 2004 Retail Manufacturer The Advertising Landscape Hispanic Media – Top 500 Advertisers The Advertising Landscape Hispanic Media – Select Categories % Of Print & TV Spend Allocated To Hispanic Media: Select Categories 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Telecom Restaurants CPG Auto Pharma 2001 2002 2003 2004 The Advertising Landscape Political Advertising The Advertising Landscape Political Advertising Historic Spending for 2004 Election  Spending exceeded $1.45 billion     42% - Presidential Election 27% - Federal (Senate, House, Federal Issues) 14% - State & Local* 17% - Ballot Issues (State & Local) *excludes ballot issue The Advertising Landscape Political Advertising Politics Is Now an Annual Category  Off-Year Elections  Gubernatorial and Mayoral  Policy Issues and Advocacy Groups   National and State Lasting legacy of 2004 The Advertising Landscape Political Advertising 2005 Estimated Political Spending  Gubernatorial and Mayoral Elections  $80 - $100 million The Advertising Landscape Political Advertising 2005 Estimated Political Spending  Gubernatorial and Mayoral Elections  $80 - $100 million  Public and Federal Policy Advocacy Groups  $140 - $160 million The Advertising Landscape Political Advertising 2005 Estimated Political Spending  Gubernatorial and Mayoral Elections  $80 - $100 million  Public and Federal Policy Advocacy Groups  $140 - $160 million  2006 Mid Year Elections  Up to $50 million The Industry Forecast • The Advertising Landscape • Key Indicators for 2005 Spending Outlook for 2005 • Key Spending Indicators Leading Product Categories Top 10 Categories Q1 2005 $2.08 $1.90 $1.70 $1.50 $1.40 $1.30 $1.10 $1.07 $1.06 $1.05 Domestic Auto UP 8% Non Domestic Auto DOWN .5% Telecommunications Direct Response UP 5% UP 19.3% Banking and Investment Services UP 2.7% Transportation and Tourism Restaurants Retail Clothing & Department Stores Retail Home Furnishings and Appliances Media & Marketing Services UP 1.5% UP 11.9% UP 1.9% DOWN 1.9% UP 12.6% Top 10 categories represent 43% of total ad spend in Q1 Dollars in billions Key Spending Indicators Leading Product Categories TV Networks – The Largest Advertiser Category 2002 TV Promotions All Advertising (including value of unpaid TV promos) % of Total Ad $ Value $14.7 $133.8 11.0% 2003 $16.1 $143.9 11.2% 2004 $17.1 $157.6 10.8% Dollars in billions Key Spending Indicators Leading Product Categories TV Networks – The Largest Advertiser Category Key Spending Indicators Leading Product Categories Weeklong Analysis of Broadcast & Cable Channels  Program promos represented up to 25% of total ad units of cable promos repeated within the same program of local broadcast promos repeated within the same program  28%  14%  25% of repetitions occurred within 15 minutes Key Spending Indicators The Upfront   “Peacock Pummeled in Upfront . . .” “Upfront Update: Broadcasters Making Progress, Still Slow Going for Cable” “$2.1 Billion in Upfront Sales for ABC”  Key Spending Indicators The Upfront – a Poor Predictor? Network & Cable Ad Spend: Upfront Market vs. Actual % Change vs Prior Year 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% 92 19 94 39 96 59 98 79 00 99 02 10 04 30 Upfront Actual Broadcast Year R2 = .24 Key Spending Indicators The Upfront – a Poor Predictor?   Only 4Q money is “firm” Variation in network inventory control from year to year Sellers are the primary reporting source  The Industry Forecast Outlook for 2005 The Advertising Outlook for 2005 Quarterly Growth Trends 1st Quarter 2nd Quarter 4.4% 3.7% 1st Half 2005 4.1% The Advertising Outlook for 2005 Quarterly Growth Trends 1st Quarter 2nd Quarter 4.4% 3.7% 3rd Quarter 4th Quarter 0.7% 4.5% 1st Half 2005 4.1% 2nd Half 2005 2.7% The Advertising Outlook for 2005 Full Year 3.4% Increase - $145.3 Billion in Overall Ad Spending The Advertising Outlook for 2005 Full Year Growth Estimates by Media 11.6 3.3 1.1 -6.4 7.5 3.8 -0.9 10.5 7.6 5.5 -0.1 Cable TV Syndication Network TV Spot TV Magazines Newspapers B2B Hispanic Media Internet Outdoor Radio The Advertising Outlook for 2005 Full Year Growth Estimates by Media 11.6 3.3 1.1 -6.4 7.5 3.8 -0.9 10.5 7.6 5.5 -0.1 Cable TV Syndication Network TV Spot TV Magazines Newspapers B2B Hispanic Media Internet Outdoor Radio The Advertising Outlook for 2005 Full Year Growth Estimates by Media 11.6 3.3 1.1 -6.4 7.5 3.8 -0.9 10.5 7.6 5.5 -0.1 Cable TV Syndication Network TV Spot TV Magazines Newspapers B2B Hispanic Media Internet Outdoor Radio The Industry Forecast AdWatch 2005 Steven Fredericks, President & CEO TNS Media Intelligence www.tns-mi.com