Ad Revenues Are Back, But Not For All

Cable TV leads in the return of ad revenue, followed by the Web, while print products are still cash poor.
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BOSTON (TheStreet) -- Advertising revenue is back, but not everybody's getting a share of the wealth.

After declining 5.5% in 2008 and 15.6% last year -- the largest dropoff since a 22.9% Depression-era drop in 1932, according to advertising analysis group

SNL Kagan

-- ad spending is estimated to rise 2.8% this year based on first-half performance. Few media weathered that period's recession better than cable television, which lost only 4% of its ad revenue between 2008 and last year, compared with 7.7% for broadcast television and 22.4% for local television affiliates. Anyone who watched AMC's

Mad Men,

USA's

Psych

or ESPN's expanded baseball and football coverage knows why cable ad revenues are slated to spike 8.9% this year and how continued investment in original programming and sports rights paid off during the tough times. Though renewed automotive ad revenue is projected to push local television stations to 15% more ad revenue this year, with broadcast networks also prepared to post a 5.5% recovery, cable managed to snag a sizable portion of their share.

"Cable networks were the shining star of the whole sector," says Derek Baine, senior analyst for SNL Kagan. "Part of that is due to the writers' strike at the networks that left a dearth of programming and led people to migrate to cable ... and a lot of them stayed."

Internet advertising was similarly resilient, weathering a 3% ad drop last year and continued confusion over effective online advertising to rebound with a projected 10.4% jump this year. Companies still struggling to find the least annoying ad size while getting the most clickthroughs accounted for much of the pullback, which Baine says was fueled more by instinct than through intent.

"The internet kind of softened during the recession because when people start panicking, they go back to the tried and true media," Baine says. "You saw pullback from Internet and mobile media as people put their dollars into cable networks and prime-time spots on local networks where they knew they would get a return on investment."

Once media shifts from screens to dead trees, however, the recession has a far greater impact. Daily newspaper advertising revenue dropped nearly 29% last year and is expected to fall another 6.5% this year. Magazines weren't looking much better, losing more than 18% of ad income last year and taking a 2% hit this year. By comparison, standard and satellite radio recovered from 19.4% and 26.1% losses, respectively, last year with 6.6% and 3.6% ad growth this year.

"A lot of the newspapers just missed the boat on digital migration and are scrambling to take advantage of the iPad and other devices that allow you to use content on different media, but it's a day late and a dollar short," Baine says. "When you look at the newspaper ad revenues, a lot have had even online revenues decline, which is pretty sad."

Rupert Murdoch's

News Corp.

(NWS) - Get Report

is an example of this, with his properties trying various paywalls and other techniques -- and drawing some derision -- to find a paying place on the Web.

News gets worse for the pulp products, as analysts predict a continued drop over the next decade. SNL Kagan's numbers suggest newspaper ad revenue will continue its fall from $46 billion in 1999 to $22 billion in 2019. Magazines won't fare much better, dropping from a $10 billion in ad revenue this year to little more than $8 billion in 2019. The Internet will account for most of those losses, as its ad earnings should double from more than $24.8 billion this year to more than $60 billion a decade from now. Cable's revenues should do nearly as well, jumping from $27.8 billion this year to $55 billion in 2019, but mobile media will take an even bigger bite -- nearly tripling from $480 million this year to more than $12 billion in 2019. Somewhat surprisingly, those gains won't come through mobile video viewing.

"Even though you're going to see Internet viewing, you're going to see protection of that window," Baine says. "With

TV Everywhere

, the cable networks are going to be more open to that model because Nielsen is going to start adding those eyeballs into linear viewing and you can start selling that as you would prime-time television."

--Written by Jason Notte in Boston.

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Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, the Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.