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Cautious Optimism Is Tone for Media Ad Spend

Wells Fargo analysts sniff the air for Q3/Q4

Cautious optimism remains the tone from business analysts at Wells Fargo Securities, as they try to gauge media revenue trends for the rest of this year.

Marci Ryvicker and Timothy Schlock said they’ve met or spoken with various media companies to get a sense of advertising trends expected in the third and fourth quarters. “Our takeaway is that core advertising is pacing better than expected for television and radio,” while the outdoor category was more mixed.

“While visibility into ’11 is still limited, the tone remains cautiously optimistic.”

The analysts said political dollars were below expectations for most of the third quarter but seem to be picking up. “Our take is that political is still strong but expectations are high.”

Core revenue at media business recently has been above expectations. “From most of the conversations we have had, core advertising has been better than expected, driven by auto, retail, telco and financial. We asked operators and media buyers if this is merely a result of advertisers pulling budgets forward in advance of the political onslaught. For the most part, there has been no evidence that this is the case, although most admit it is hard to know for sure.”

Now the ad budget season for 2011 is approaching. “Of the various media buyers we have spoken with, preliminary rumblings are that 2011 budgets seem to be in line with 2010. Of course, this can change quickly depending on consumer spending patterns but most major brands are afraid to lose mind share even in a slowing economy.”

And, they said, national ad spending in all media is still pacing ahead of local, though the latter has shown some improvement.

“It sounds like local is going to tread along the bottom until unemployment and housing improves, so those companies with significant national exposure” — like CBS and Clear Channel Outdoor — “have the greatest advantage.”