Which Comes First, Consumer Spending or Advertising? Right Now, Neither

U.S. ad spending has been losing momentum along with the general economy. Of course it's a giant chicken-or-egg question to some extent, but it's axiomatic: As consumers continue to lose confidence in the present and future course of the economy, brand marketers are more apt to go along with their more cautious mood by cutting ad spending — rather than trying to talk consumers out of their funk with more marketing.

So it doesn't come as a huge surprise that WPP's Kantar Media unit finds that ad spending expanded only 2.8 percent in the second quarter compared with 4.4 percent in the first quarter, when there was more hope among advertisers and consumers that a genuine U.S. economic recovery was underway.

Some of the biggest brand advertisers and categories have led the way in slowing growth of outlays, Kantar said, and they may not be finished retrenching yet. "The whole world is nervous — and nervousness usually leads to contraction, both for consumers and advertisers," Bob Jeffrey, chief executive of WPP-owned JWT, told the Wall Street Journal.Continue reading...