Analyst: US ad revenue to fall through 2009

Barclays analyst Craig Huber predicted a decline of 3.6 percent in U.S. advertising revenue to $284.3 billion this year, and a further 5.5 percent drop in 2009.

He said the Barclays economic team is forecasting a 1.4 percent increase in real gross domestic product--excluding inflation--for this year and a decline of 0.4 percent in 2009.

Huber pointed out that in the 1991 and 2001 recessions, real GDP was down 0.2 percent and up 0.8 percent, respectively. In 1991, U.S. ad revenue fell 1.9 percent and 2001 saw a decline of 6.2 percent.

For this year, national ad revenue should perform better than local ads, down 1.2 percent to $167.9 billion. Local ad revenue is expected to fall by 6.8 percent to $116.4 billion.

For 2009, Huber is forecasting a 4.5 percent decline in national ad revenue and 7.1 percent for local ads.

He reduced his forecast for newspapers to a decline of 16.5 percent this year and 12 percent for 2009. Huber's prior estimates were declines of 14.5 percent and 8 percent.

Magazine ad revenue is expected to fall by 7.5 percent this year and 12.5 percent in 2009.

The analyst lowered his forecast for broadcast TV stations. He's not expecting an increase of 3.9 percent in 2009 and a drop of 8.3 percent next year. Radio also will be hurt, down 7.2 percent in 2008 and 7.4 percent in 2009.

Broadcast TV networks' estimates also were cut, to declines of 2.5 percent and 8 percent for 2008 and 2009, respectively.

Outdoor ads should see revenue go up by 1 percent this year but flatten out next year, while yellow pages ads should fall by 7 percent and 9 percent over the same periods. Direct mail ad revenue is forecast to decline by 3.5 percent this year and 6 percent in 2009.

The bright spots were cable and Internet ad revenue growth.

Cable networks should see ad revenue rise by 3.1 percent and 1.8 percent for 2008 and 2009, while Internet ads should jump by 16.9 percent and 14.1 percent over the two periods.