Summary:

The online ad turnaround will have to wait. Online ad spend in Q2 began with some promise, says JMP Securities analyst Sameet Sinha in a res…

The online ad turnaround will have to wait. Online ad spend in Q2 began with some promise, says JMP Securities analyst Sameet Sinha in a research note, but that spark has gone out, as advertisers remain cautious. Sinha said that despite “a strong March, a solid April ,and an in-line May,” June is showing a retreat in budgets as travel and finance remain weak, and retail looks mixed at best. In essence, Sinha expects Q3 to remain slow, with the possibility for growth returning for the Q4 holiday season.

Display’s dual personality: Although Nielsen found that some larger brands were increasing their display spend by 27 percent in Q1, and TNS Media Intelligence said that category in general was up 8.2 percent for that same period, Sinha sees the glass as half-empty. The problem with display is the divide between premium and remnant advertising. Pricing pressures continue to hurt the premium segment. On the remnant end, direct-response advertisers had started to accelerate their spending in Q1 and that trend has continued into this quarter. Sinha notes that while some big brands had also initiated direct-response campaigns during Q2, that has not carried over into the more pricey branding buys.

Search stabilizes: After its first down quarter in Q1, the search business continues to benefit from additional traffic, though this is being offset by declines in cost-per-clicks and click-through-rates.

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