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Outlook for All Advertising Good for Google

According to a Fitch Ratings market assessment, advertisers now have more options in the current economic environment than at any other time, and they are scaling back traditional high Cost Per Thousand (CPM) "impressions" oriented advertising campaigns.

Even profitable marketers will use increased bargaining power to attain better rates and associated concessions from big media companies. The study offers trends and outlooks for several advertising sub-sectors, as follows:

Newspapers
Newspaper industry revenue growth will be negative for the foreseeable future as both ad pricing and linage will be under pressure within each of the four main components of newspaper revenue streams. More newspapers and newspaper groups will default, be shut down and be liquidated in 2009 and many cities could go without a daily print newspaper by 2010.

Yellowpages
Few markets will be able to support more than two print directories and most markets will eventually only be able to support one book. Another year of accelerated declines in yellowpages advertising could significantly pressure the solvency of the two pure-play incumbent directories companies.

Terrestrial Radio
Radio is non-unionized, and converts a higher percentage of EBITDA to free cash flow. Listenership is likely to continue to fall, though available inventory should remain relatively stable, and pricing could be up on some advertisers. Internet streaming provides additional day parts to sell. High definition (HD) radio in automobiles could provide some growth to listenership.

Magazines
Fitch expects the larger players to rationalize available print advertising inventory through consolidation and closing down titles. Several categories that used to have multiple titles will likely have advertising bases that can support only one major title. With limited catalysts for growth in the core print product, some magazine publishers have become more proactive online.

Outdoor
The potential negative effects of increased inventory from digital roll-outs should be tempered by increasing appeal to national advertisers, as well as decreases in price per unit. Cost structures should benefit from digital signage, as displays can be centrally managed. Low CPMs and better networked national sales pitches, better position outdoor advertising companies.

Cable Networks
Cable industry ad inventory has grown, causing a deceleration of the decades-long increase in ad dollars. Cable continues to be a targeted medium, at a lower price relative to broadcast TV. Cable will continue to gain share from broadcast. Cable networks to continue to embrace VoD and digital strategies, which could provide some modest revenue growth.

Online
Online could be affected by legacy advertisers scaling back experimental use in favor of traditional mediums. Search is more healthy than display ads. Remnant advertising will see a shakeout in the ad network space. Online video and social networking will growth. Regulatory issues could be a factor in behavioral targeting. Online advertising will continue to capture share from all traditional media.

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