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Ad spending back from the brink

/ Source: CNBC

After the worst recession to hit advertisers since the Great Depression, there are finally signs of life. Recent data show ad spending — down for three straight years — is finally on the rise.

According to TNS Media Intelligence, a company which tracks the market, ad spending over the first six months of the year was up nearly seven percent.

General Motors was the top spender — at $1.27 billion — an increase of more than 10 percent from the same time last year.

Proctor and Gamble also topped $1.26 billion, with AOL Time Warner at $965 million, Daimler Chrysler at $757 million and the Ford Motor Company rounding out the top five with $705 million.

Every indicator is showing that we’re really coming out of it. There really isn’t any category that’s not starting to see some robustness,” said Donnie Deutsch, CEO of advertising firm Deutsch Inc. who is also a CNBC contributor.

Deutsch said the comeback is not only good news for the battered market — but for the economy as a whole, since ad budgets are usually the first to get cut.

“If corporations are looking to make their quarter to quarter numbers, it’s very easy to slice advertising numbers out,” Deutsch said. “The fact that they’re not doing that shows obviously that profits are up [and] they’re bullish on the future, and really it’s a good harbinger for the economy.”

And because the ad market is so closely tied to overall economic performance, economists say the level of activity can be used as a barometer to forecast future growth.

“I think advertising expenditures respond to the economy, so when the economy does better you get more advertising, when the economy does worse, there are cutbacks,” said Dick Rippe, an economist with Prudential Financial.

In fact, when advertisers began to slow their spending three years ago, it was one of the earliest indicators that the overall economy was beginning its tumble — a slide that ended in a recession.

Now that some companies are spending again - experts say it’s just a matter of time before many more do as well.

“The big spenders are spending, and everyone else usually follows after that,” Deutsch said.

Indeed, many more companies are saying they plan to boost ad spending.

Over the next four months, Blockbuster Video, The Gap and Kraft say they’ll spend more on advertising, a sign that the overall market may be slowly but surely coming back.