• by Joe Mandese  @mp_joemandese, November 1, 2006

Warning there is "no real momentum" to the advertising business, an influential Wall Street equities team once again lowered its outlook for U.S. and worldwide ad spending in 2006 and 2007.

"While political spending is purportedly robust and likely tightening up inventory, we do not sense any real advertising momentum," Merrill Lynch analyst Lauren Rich Fine wrote in the latest in a series of downward revisions for its advertising outlook. "There is some hope that the holiday season will be strong as gas prices have come down of late but that is somewhat offset by concerns about declines in housing values and the pressure that will create on consumers' finances. Once we get past the elections, it is unclear from where the momentum will come" from.

On a positive note for Madison Avenue, Fine said the Merrill Lynch team is more bullish on prospects for ad agency stocks than it is on the media companies they buy, especially newspapers, which have issued especially weak third quarter results.

"We continue to recommend agency names such as Omnicom and aQuantive as their growth rates are more compelling than traditional media and the valuations afford some upside," she wrote. "Marketers continue to try to break through clutter, embrace new types of media, and are looking for a return on their investment. This favors the agency/marketing holding companies as their fee-based compensation makes them largely indifferent to their clients' media choices.

She said aQuantive, an ad agency holding company focused primarily on digital and interactive media, is a direct beneficiary of the strength in online ad expenditures and that its recently push to expand into overseas markets will also accelerate its growth.

On Tuesday, aQuantive, said it was expanding its Avenue A/Razorfish a unit into the Asia Pacific market with the acquisition of Hong Kong-based interactive agency e-Crusade. The deal gives Avenue A/Razorfish a foothold in Asia and follows recent deals extending the company's presence into Europe and Australia.

AQuantive is the latest of the major agency groups to refocus on the burgeoning Asia Pacific marketplace, but it's not the only one. On Tuesday, Havas' MPG unit said it also is increasing its presence across Asia Pacific and will be fully operational across the region beginning Jan. 1, 2007.

MPG currently operates in three APAC markets; Australia, India and Japan. In 2007, the media network will also have a presence in all remaining key regional markets: China, Hong Kong, Singapore, Malaysia, Indonesia, Thailand, Korea and Taiwan.

Vishnu Mohan, CEO of MPG in Asia Pacific, will lead the expansion and the new network from the MPG regional headquarters in Singapore and will report to Alfonso Rodés Vilà, global CEO of Havas Media.

In addition, the media operation known as Motivator, a joint venture between MindShare (GroupM) and Euro RSCG Asia Pacific, will cease to operate as of Jan. 1, 2007. The Motivator brand will continue to operate in Australia and India on GroupM clients. All media clients won by GroupM through the Motivator brand will stay with GroupM and all clients of the Havas group (Euro RSCG or MPG) will be serviced by MPG.

Merrill Lynch, meanwhile, has reduced its outlook for both the U.S. and the global ad marketplace, lowering its 2006 growth estimates to 4.7% and 4.3% for the U.S. and worldwide, respectively. That's down from Merrill Lynch's last estimates of 5.1% and 4.9%, respectively.

Mark Walsh & Amy Corr contributed to this story.