U.S. advertising seen plunging 13% in 2009

Advertising revenue in the United States will drop 13% this year, but improve to a decline of just 1.5% in 2010, according to a new report from Barclays Capital.

Barclays on Thursday lowered its previous estimates, which called for an ad-revenue decrease of 10% in 2009 and a gain of 1% in 2010.

Analysts Craig Huber, Douglas Anmuth and Anthony DiClemente said they would "significantly underweight" large-cap media and newspaper stocks, and "remain cautious on stocks with exposure to the broadcast-television networks and local broadcast-station groups."

The analysts cut their 2009 estimate for broadcast-network TV ad revenue to a decline of 17.5% from the previous forecast of a 10% drop. Revenue at the networks should rise by 1% in 2010, they said.

At TV stations -- which have been severely hurt by declines in automotive and retail advertising since the financial downturn intensified last fall -- Barclays now expects ad revenue to plummet 21.5% this year, compared with the earlier forecast of a 15.5% decline. TV-station ad revenue is seen dropping 3.2% in 2010.

The analysts also reduced their Internet-ad revenue forecast to a gain of 2.3% in 2009, to $23.7 billion. The projection reflects a decline of 1.2% in display ads; 8% growth in search; a 7.5% drop in auctions and other ads; and a 1% growth in lead generation and email ads.

"[W]e believe the secular shift to online is intact and we expect growth to accelerate through 2011 as the Internet continues to capture a greater share of the advertising market," Huber, Anmuth and DiClemente wrote.

Barclays expects display ads to pick up to some degree in 2010, with 2.7% growth, while search-ad revenue climbs 10%. Overall, the analysts see Internet-ad revenue rising 5.7% to $25 billion

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