Wieser Upgrades Near-Term Ad Outlook, Downgrades National TV's

Influential Wall Street analyst and former Madison Avenue bean-counter Brian Wieser released a more optimistic outlook for the ad industry this morning, noting: "Ad revenue growth is more favorable for 2013 than we thought it would be in April," when the Pivotal Research Group analyst released his last industry forecast.

Despite downgrading his projections for national TV ad demand, and leaving national digital advertising “unchanged,” Wieser says the “short-term prognosis for advertising is better than we previously forecast. By our estimates, advertising grew by 1.7% in the second quarter of 2013 versus our prior forecast of 1.0%.

“Per our model, we now expect national TV to grow by 3.1% on a normalized basis this year, including 5.5% growth for national cable, vs. prior expectations of +2.7% for national TV and +5.3% for national cable. National digital media looks set to grow in 2013 by 19.2% this year versus our prior +14.6% forecast, with clear winners (i.e., Google's display businesses and Facebook) and losers (i.e., Yahoo, AOL and others who might be generally characterized as premium publishers).”



Wieser reaffirmed his view that the softening of the paid-search marketplace in general, and Google’s in particular, may be due to demand from advertisers shifting to social media such as Facebook’s “promoted posts.”

He estimates that paid-search advertising growth decelerated to 11% in the second quarter, which is a much slower rate of expansion than it had been experiencing previously.

“Some of this deceleration is likely due to market saturation, as most small businesses -- the core customer of paid-search advertising -- are likely by now already buying paid search, and not adding to their individual budgets by much,” he noted in the report sent to Wall Street investors, adding that new social media marketing platforms, such as Facebook’s promoted posts, have been growing rapidly among small business owners.

“Small business ad spending on Facebook seemingly took off after Facebook launched Promoted Posts in June 2012. By October 2012 Facebook indicated that 300,000 "pages" (small business) were paying for the product and 500,000 were doing so by January,” Wieser said, concluding: “Indirectly, the company has implied a doubling of its small business advertiser base from those levels as of July of this year when it indicated it had one million total advertisers over the prior 28 day period (virtually all businesses are small, and promoted posts are the flagship ad product for small businesses). From this timeline and other data points we have around small business spending trends, it seems likely that a significant share of Facebook's gains are coming at Google's expense.”
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