The US advertising industry contracted in the first half of 2008, as budget cuts by automotive and pharmaceutical companies took a heavier than expected toll on local radio stations, newspapers and magazines.

The 1.4 per cent decline in the first six months of the year, reported yesterday by Nielsen Monitor-Plus, included a 6 per cent decline in online display advertising as retrenching financial services companies scuttled expectations that the new medium might prove immune to a slowdown.