Ad Growth Slows Dramatically in Second Quarter

The ad market screeched and skidded in the second quarter — U.S. ad spending grew just .9 percent from April to June compared to a year earlier.

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The problem: This is less than half the growth the ad market saw in the first quarter, which was 1.9 percent over Q1 of 2011, according to Kantar Media.

What happened?

Of course an economic pullback contributed to the slowdown. But there were some other factors, like the fact that some advertisers were holding back their spending so they could dole out more ad dollars around the Olympics. (Read More: NBC Tops $1 Billion in Olympic Ad Sales.)

So it’s not all bad news. The third quarter should get a boost from both the Olympics and political ad spending. Whether gains are more sustained will depend on consumer spending, and the impact that has on corporate America.

Some sectors fared better than others. Television led the pack, with its advertising by growing by 4.4 percent in the quarter. In particular, Spanish-language TV saw whopping 17.8 percent growth thanks to a surge in spending from consumer packaged goods and automakers. (No wonder News Corp is moving into this business.) Syndicated TV saw 10 percent growth.

What suffered?

Surprisingly, Internet display ads fell 5.4 percent — though that doesn’t include either video or mobile ads, which likely stole share. (Read More: Facebook vs. Twitter, Who Has Edge in Mobile Ad Wars?)

Higher average cost per impressions (CPMs) only partially offset reduced volume of ad impressions. And no surprise, the print ad business continues to suffer. Ad spending in Sunday Magazines declined 7.6 percent and local newspaper spending declined 1.9 percent.

So which advertisers were responsible for these swings? Automakers made some big changes. General Motors , one of the nation’s largest advertisers, cut its second quarter spending by more than 30 percent, bringing its annual marketing spending to its lowest level in more than a decade. Meanwhile Toyota spent 22.7 percent more than last year, following the disastrous impact of the Japanese earthquake and tsunami. (Read More: Consumer Demand Drives Strong August Auto Sales.)

Procter & Gamble spent 13.12 percent less than a year ago as it shifted some of its ad dollars into the Olympics. But that wasn’t the only reason for its tighter budgets — it’s the sixth consecutive quarterly decline for the consumer products maker, which has said its shifting money out of traditional media into more effective online platforms.

In contrast, rival Unilever spent 48.6 percent more than a year ago as it pours money into competing with P&G and others.

The real test of the economy will come in the fourth quarter, when the impact of the Olympics is over and as political ad spending dies down.

—By CNBC's Julia Boorstin

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