Analysts Confident Advertising Will Rise to Pre-Recession Levels

Analysts Confident Advertising Will Rise to Pre-Recession
Levels

Published
on October 08, 2009 in MediaBuyerPlanner. 

UBS analyst Michael Morris believes the recent ad slump does
not represent a permanent change in how marketers reach out to consumers, and
says ad revenue will return to pre-recession levels.

Morris based his belief on an examination of trends over the
last 30 years, during which time companies consistently spent 2.3 cents on
advertising for every $1 of consumer spending, writes the Associated Press (via Yahoo Finance).

Morris expects the third and fourth quarters of this year to
show advertising improvement, based on the fact that consensus estimates say
revenue at the top 100 U.S.
ad spenders will rise 3.0% in 2010.

In the third quarter of last year, ad sales fell 3.6%, with
more significant drops following in Q409 and Q109 (at -7% and -9.5%
respectively). The precipitous drop began to slow in Q209, down 6.9% compared to the year before, writes MediaPost.

Morris said big ad spenders were overzealous in their cuts
between 2007 and 2009. While revenue at the top 100 advertisers fell 6%, those
advertisers cut ad spending by 13%. As the economic recovery picks up its pace,
Morris is confident those spenders will begin to move toward pre-recession
spending habits.

Meanwhile, Deutsche Bank analyst Doug Mitchelson raised his
earnings estimates, pointing to the fact that national advertising revenue came
in higher than expected in Q3.

Both Mitchelson and Morris raised the third-quarter adjusted
profit forecasts for CBS, Time Warner and Viacom.