Analysts: Ad Recovery In Sight?

Let the recovery begin! Wall Street analysts are ready to call a bottom to the ad recession, identifying the first upward movement in several quarters. Now that analysts have completed second-quarter earnings research, they’re ready to say the first quarter of 2009 was the trough of the ad recession.

In a report out Thursday morning, Bernstein Research’s top media analyst, Michael Nathanson, posed this question: “There’s a turn: but will there be a U-Turn?” Bernstein’s Ad Tracker research shows second-quarter ad revenue turning a corner and its graph heading upwards for the first time since the first quarter of 2008. That, of course, simply means that declines are lessening.

According to TNS Media Intelligence data, U.S. media advertising saw a 12.9% drop in the second quarter after a 14% drop in the first quarter. According to Bernstein’s analysis, the categories showing growth included retail, media and entertainment, telcos and political. Telcos and restaurants showed growth over the first half of the year, while automotive and finance remain troubled.

Cable networks posted the smallest ad declines of all media sectors in the period, falling just 3.8% compared with 4.8% in the first quarter. Broadcast networks were down 4.6% compared with a 9% decline. TV stations saw little quarter-over-quarter improvement, falling 24.5% in the second quarter versus 24.9% in the prior period. The biggest surprise in the report is that online ad revenue fell much more significantly than television over the second quarter period, down 9%. The news is bound to give TV executives some heart that advertisers continued to put their faith in traditional media in times of economic stress.

Only Google, Discovery and National Cinemedia, which controls advertising in movies theaters, saw ad growth in the second quarter. Google grew ad revenue by 3.5%, Discovery was up 0.7% while National Cinemedia was up 11.6%.

Even with this positive news, Bernstein is revising its 2009 estimate for U.S. advertising downwards, to negative 12.8% from negative 11%. For 2010 the company suggests a growth of 1.9%. Nathanson points out this position is more bullish than others predictions, which call for U.S. advertising to fall by 2% next year.