But Wall Street will quickly scrutinize the breakdown of CEO Tim Armstrong’s sales performance. Last quarter, the company posted a 5 percent ad bump, but investors hated the details: Much of the growth was coming from the company’s low-margin network business, in addition to gains from its HuffPo and TechCrunch acquisitions.

What Wall Street really wants to see (or at least what it wanted to see last quarter) is organic growth in the company’s core display business, and improving earnings.

Overall, AOL’s ad sales are up 8 percent, and display is 15 percent. Investors might raise an eyebrow over the fact that domestic display growth of 14 percent is a sequential decline from last quarter’s 16 percent rise, though. And bear in mind that these numbers include both TechCrunch and Huffington Post boosts. Also worrisome — a mere 1 percent increase in the company’s owned and operated properties — again, that’s after accounting for those two big acquisitions. (Click image to enlarge.)

Another flag for AOL: Even though it has added TechCrunch and the Huffington Post over the last year, traffic to AOL’s own sites has barely budged: A year ago, AOL attracted 106 million monthly unique visitors to its sites; this year, the total only moved up to 107 million.

AOL earnings call starts at 8 am ET, and beyond this morning’s release, investors will also want to hear what Armstrong is seeing in the ad market in general. Until recently, digital ads have been booming for just about everyone except for AOL and Yahoo, but recently we’ve heard about softness/slower growth making its way to the Web, too. (Though no sign of that from Google.)

And, of course, Wall Street will also want to see if Armstrong has anything to say about eternal speculation that he wants to link up with Yahoo itself.

That’s both because of the size of the deal — around $400 million — and because the purchase deals with a sector that Google already dominates — display ad sales.

AdMeld is one of a handful of big ad optimization platforms that work on behalf of publishers by trying to get the best prices for their inventory from a variety of ad networks. That kind of work is one of the few parts of the ad tech ecosystem where Google didn’t already have a presence, so a deal for AdMeld or one of its peers always seemed inevitable.

Google declined to comment; AdMeld CEO Michael Barrett hasn’t responded to requests for comment.

Google’s display ad team, led by Neal Mohan, has spent the last couple years expanding its footprint in the ad tech ecosystem. In 2009, it bought Teracent, which customizes online ads on the fly. A year ago, it bought Invite Media, which helps ad buyers place orders for ad inventory via “real time” ad exchanges. And all of this stuff hovers around its DoubleClick ad exchange platform, which it bought in 2007 and relaunched last year.

Here’s one way to think about the ad tech landscape: A chart created by Luma Partners banker Terry Kawaja, which shows the dizzying number of companies that have cropped up in recent years. Don’t worry if you can’t understand it — it’s designed in part to be a bit obtuse and intimidating. What’s important to recognize here is that up until now Google has had a presence on the left side and center of the chart; if the AdMeld deal goes through, it will extend its reach to the right side, too.

[UPDATE: Thanks to the several readers that pointed out that I don't know how to read a chart, and more important, that I've understated Google's existing relationship with publishers: Google's DFP platform already serves ads for publishers, and the DoubleClick exchange sells ads on their behalf, too. A better way of making the point: The AdMeld deal will give Google even more ways to do business with publishers.]

Will Washington sign off on this one? Google obviously thinks so, and the fact that Google got the go-ahead for an even larger deal last year — its $750 million AdMob purchase — should give it confidence.

One difference, though: Last year, Google successfully argued that buying AdMob wouldn’t make it dominant in the mobile advertising industry because the mobile advertising industry barely existed.

Displays ads, however, are a real business, in the single-digit billions. That number will grow much bigger — Google chairman Eric Schmidt has thrown out a $200 billion goal — but right now Google, via DoubleClick, has a big chunk of what’s there. Earlier today Mohan gave a speech at an industry conference outlining his vision for the market; you can see a summary here.

AdMeld’s two primary competitors have been Rubicon and Pubmatic. Last year News Corp., which also owns this Web site, merged its display ad technology assets with Rubicon.

TechCrunch first reported news of the Google AdMeld deal.

Peer39 used to be in the ad network business, but switched gears a couple years ago: Now it sells data that’s supposed to let ad buyers find their audiences more effectively.

The pitch: Unlike other ad targeting operations, which try to find audiences based on their online behavior, Peer39′s system figures out what’s actually on a given Web page, so buyers can place an appropriate ad. That’s supposed to improve the ad’s efficiency, while avoiding messy privacy problems.

The company says it has been scaling up along with the rest of the display ad business as it moves into real-time exchanges like Google’s AdX; earlier this year Peer39 said it was analyzing 47 billion pages a month.

This was an inside round from previous investors including Evergreen Venture Partners and Canaan Partners; CEO Andy Ellenthal says he’ll use the money to expand in the U.S. and internationally.

That’s not a formal estimate of Google’s performance, of course. But since Google dominates search, it’s certainly a good directional indicator.

Meanwhile, Google nemesis Facebook (remember when Microsoft and Yahoo used to vie for that title?) is also growing: Efficient Frontier says pricing on the social network’s ads has moved up more than 40 percent since the end of last year. It predicts ad spending on Facebook will grow more than 200 percent this year.

The company also says that ad buyers and sellers are indeed using display ad exchanges like Google’s DoubleClick/AdX, and that there is 300 percent more inventory in that system than there was a year ago. But more inventory equals lower prices, which are down 30 percent.

The Silicon Valley company is creating the video marketplace within its DoubleClick Ad Exchange, Neal Mohan, a Google vice president for product management, said in an interview. It resembles existing exchanges used to sell graphical and interactive ads, a category known as display.

Such exchanges allow companies to bid to place ads across different websites in real time, or right at the moment a user has called up a particular Web page.

Read the rest of this post on the original site »

The good news for Armstrong is that he has now conditioned Wall Street to expect these drops, as he works on a turnaround effort that began in the spring of 2009.

And because some of the ad drop is “self-inflicted”–the result of AOL’s decision to focus on quantity instead of quality as it revamps its ad team and strategy–it’s possible to add a more positive spin to the data. For instance: AOL’s domestic display ads, where the company has the most control of results, are only down 8 percent.

Armstrong’s vision is that eventually his company will once again be one of the industry’s top players: “AOL’s goal is to be competitive with Google and Facebook,” he said during his earnings call this morning. “We’re not trying to be competitive with people farther down the chain.”

Okay. But when? Today Armstrong announced that he expects AOL’s ad sales to mirror the broader industry’s by the second half of 2011. That will be more than two years after he took over.

Then again, you can argue that AOL languished within Time Warner’s grasp for the past 10 years. By comparison, that’s a reasonably speedy turnaround–and bear in mind that any Internet turnaround is a very rare thing.

So here’s the question: Will Wall Street wait to find out if he can do it?

—————
EARLIER:

A quick first look at AOL’s Q3: Revenue of $563 million and adjusted earnings of $0.93 a share. The Street was looking for $557 million and adjusted earnings of $0.50 per share.

AOL’s ad slump continues, though Wall Street expected that: Ad revenue was down 27 percent this quarter, and display ads were down 14 percent. Domestic display was down 8 percent.

Things to look for in the company’s financials and during its conference call this morning: Most important, an update on its attempt to turn around its ad sales unit, which has been a mess–analysts are still expecting AOL to post a substantial ad sales decline this quarter; additional news about the company’s renewed search pact with Google; and perhaps insight into Tim Armstrong’s M&A plans following a shopping spree that included TechCrunch and 5Min.

AOL says it spent $97 million on TechCrunch, 5Min and Thing Labs, and that it could spend up to $23 million more on earnouts/retention bonuses over the next three years. $65 million of that total went to 5Min.

Here’s what AOL’s ad story looks like, quarter by quarter:

And here’s what AOL wants you to think about as you evaluate its ad decline–moves it has made on its own that will cut down sales in the short term, like its decision to more or less shutter its European operations.

I’ll update with notes following the company’s 8 am earnings call.

Search ads tend to be simple text links that pop up next to the results of a query. Display ads are larger, typically appearing on websites as banners, though sometimes spiced up with video or animation.

During a presentation during the IAB advertising conference, Google executives said the medium will become much more engaging. In past years, display ads were “static” and it was “tough to engage Madison Avenue’s most creative minds,” said Barry Salzman, a Google managing director for media. Now “display is bringing ‘sexy’ back.”

Read the rest of this post on the original site

See Trada, a two-year-old company dedicated to helping small businesses buy advertising…on Google. Google Ventures is leading a $5.75 million C round in the  Boulder, Co.-based company, along with existing investor Foundry Group. It had previously raised $2.2 million.

Trada isn’t Google-exclusive–it will also help you buy search ads on Yahoo (YHOO) and Microsoft’s (MSFT) Bing, of course–but if you’re buying search ads, there’s no mystery about where you’re most likely to spend that money.

There is no shortage of companies, consultancies and one-man shops dedicated to search engine marketing. Trada’s pitch is that it specializes in small customers who spend between $5,000 and $50,000 a month on search, and that it “crowdsources” its help by getting a team of search marketing experts to work on individual accounts. The search experts get a slice of the client’s budget, and Trada takes 25 percent of that for itself.

Just like its new backer, Trada has bigger ambitions than search–it hopes to expand into display ads, for instance, including Facebook’s platform.

So today’s a chance for the company to impress investors again, as it unveils its Q2 earnings. In a lovely bit of timing, it has primed today’s pump with news that it had persuaded Omnicom to commit “hundreds of millions” of dollars into Google’s display ad exchange over the next two years.

What else can Google do to convince the Street? Here’s Citigroup (C) analyst Mark Mahaney’s always-helpful cheat sheet, which tries to handicap investors’ reactions to a range of different results (click image to enlarge). The consensus calls for revenue of about $5 billion and earnings of around $6.50 a share; both numbers are up about 21 percent over the previous year:

This is normally the part of the post where I go over other interesting stuff that Google might address during its call, like its back-and-forth with China, the impact of its Nexus One failure, or the “when will YouTube turn a profit” question.

But Google is doing its best to keep these calls closely focused on its core search business and its moves into display ads. And as of Q1, it has banished CEO Eric Schmidt from the proceedings, lest he say an interesting word.

Still, you can always hope. I’ll be covering the earnings report and subsequent call live today, starting at 4 pm eastern; check back later in the day for a link.

In the first quarter, Facebook pulled ahead of Yahoo for the first time and delivered more banner ads to its U.S. users than any other Web publisher, according to market-research firm comScore Inc. (SCOR).

Overall, Facebook.com served 176.3 billion display ads on its website over the first three months of 2010, or 16.2 percent of the total, said comScore. Yahoo served 131.6 billion banner ads to Yahoo users, and Microsoft served 60.2 billion, according to comScore. The data don’t include ads that Yahoo and Microsoft delivered to other Web sites through their networks, a major source of revenue for each.

By revenue, Facebook has a long way to go to catch up to its more established rivals. The social-networking site earned more than $500 million in revenue in 2009 and is forecasting revenue of more than $1 billion in 2010, according to people familiar with the matter. Yahoo earned $6.5 billion in revenue in 2009, mostly from advertising.

Read the rest of this post on the original site

Still, in the past few years, the search giant has started flexing its ad prowess on its own behalf, in limited ways: It has taken out ads to push products like its Chrome browser, its Nexus One smartphone, and even its position in its fight/negotiation with China. All using Google ad products, of course.

So I guess this a natural next step: Google ads advertising Google advertising. Google (GOOG) has at least eight of these YouTube spots, which the company is promoting via banner ads.

I think they’re quite clever. And I’m assuming they’re copyright-compliant–note the licensing note in the “Batman” spot. No need to tangle with the people at Time Warner (TWX) while you’re still locked in a legal battle with Viacom (VIA). I also appreciate the plug for The National, which is indeed a great band.

The only odd thing here is that the “Search on” campaign is  advertising…Google search. Which really doesn’t need a boost.

If anything, you’d think Google would be trying to sell advertisers on its display ads. But perhaps that’s coming, as CEO Eric Schmidt hinted during last week’s earnings call.

Thanks to John Battelle for spotting.

The publisher hasn’t said how much it will charge readers and isn’t offering many other details for now. But subscribers to the print edition will be able to access the site for free.

By adopting the “metered model,” the New York Times (NYT) is emulating the Financial Times, which lets readers peruse up to 10 stories a month before forcing them to buy a subscription to the online paper.

That model isn’t all that different from the subscription strategy employed by News Corp.’s (NWS) Wall Street Journal: While much of the Journal is theoretically behind a pay wall, it’s a fairly permeable one designed to give both casual readers and search engines access to the content. (News Corp.’s Dow Jones owns both the WSJ and this Web site).

Both are have-cake/eat-cake strategies: Generate as big an audience as possible to sell to advertisers while extracting a second revenue stream from hard-core readers. The Times, which is reportedly generating $100 million a year from Web display ads, wants to do the same thing.

The paper has tried a pay wall before. In 2005, it rolled out “Times Select” whereby it cordoned off access to op-ed columnists like Thomas Friedman and to archived stories and other features. That strategy generated around $10 million a year. But it was considered a failed experiment, and the Times dropped the wall in September 2007.

Now, of course, $10 million a year sounds like a nice boost for a paper that lost more than $35 million in its most recent quarter and saw print ad revenue plummet throughout the year.

A New York Magazine story published on Sunday predicted the timing of the announcement, even though New York Times executive editor Bill Keller told me the piece was “long on speculation.”

The New York Times Announces Plans for a Metered Model for NYTimes.com in 2011NEW YORK, Jan 20, 2010 (BUSINESS WIRE) — The New York Times announced today that it will be introducing a paid model for NYTimes.com at the beginning of 2011.
The new approach, referred to as the metered model, will offer users free access to a set number of articles per month and then charge users once they exceed that number. This will enable NYTimes.com to create a second revenue stream and preserve its robust advertising business. It will also provide the necessary flexibility to keep an appropriate ratio between free and paid content and stay connected to a search-driven Web.
Through 2010, NYTimes.com will be building a new online infrastructure designed to provide consumers with a frictionless experience across multiple platforms. Once the metered model is implemented, New York Times home delivery print subscribers will continue to have free access to NYTimes.com.
“Our new business model is designed to provide additional support for The New York Times’ extraordinary, professional journalism,” said Arthur Sulzberger, Jr., chairman of The New York Times Company and publisher of The New York Times. “Our audiences are very loyal and we believe that our readers will pay for our award-winning digital content and services.”
“This process of rethinking our business model has also been driven by our desire to achieve additional revenue diversity that will make us less susceptible to the inevitable economic cycles,” said Janet L. Robinson, president and CEO, The New York Times Company. “We were also guided by the fact that our news and information are being featured in an increasingly broad range of end-user devices and services, and our pricing plans and policies must reflect this vision.”
More details regarding the metered model will be available in the coming months.

[Image credit: etoile]

Before you snicker, bear in mind that Carol Bartz’s “B-” aside, people are still buying a lot of ads on Yahoo (YHOO), at least when it comes to display ads, where the Internet giant dominates. JP Morgan (JPM) puts the company’s share of the U.S. market for display ads at 17 percent, well ahead of No. 2 Microsoft (MSFT) at 11 percent and AOL (AOL) at seven percent.

Here’s a highlight reel of some of the more interesting inventory the company has sold in the last year. From the outside, at least, a lot of this stuff seems fairly similar to other big attention-getters that marketers are running on other Web sites. Apple’s (AAPL) inventive ads, for instance, are all over the Internet.

And lots of publishers are pushing oversize ads (and I bet that Web surfers will soon develop the ability to ignore those, just as they do with conventional banner ads).

Note that not everything here is a holy-cow-wouldya-lookit-that presentation, though. One of the highlights, for instance, is simply the addition of video to a search result for Charles Schwab (SCHW).

In any case, the clip works as a pretty good survey of Web advertising, and it’s reasonably short. Though if you’re not a huge fan of hairband guitar solos, you may want to turn the volume down.

Kessler cited four reasons for the upgrade:

• Checks and company comments indicate firming in display ads.
• Checks with search engine marketers find Yahoo search performance in Q4 tracking much better than ComScore (SCOR) data indicate.
• Regulatory approval of Microsoft (MSFT) deal in in early 2010 could serve as a catalyst.

Read the rest of this post on the original site

Something else you likely know: One big exception to the rule has been cable TV advertising, which is up nine percent for the year and is one of the reasons companies like Viacom (VIA) have been in favor with investors. It also helps explain why Comcast’s (CMCSA) investors are only mildly upset about the NBC Universal deal.

Something you may not know: Those newspapers no one reads or advertises in anymore? They’re increasingly filled with coupons, or “free-standing inserts,” in industry parlance. Those are up 11.2 percent this year.

One big caveat: In the table below, note that the “Internet” category isn’t really Internet advertising because it doesn’t include Google (GOOG), the world’s biggest Internet company. Nielsen is only measuring conventionally sold display ads here, which means it is missing search ads, pay-for-performance ads and just about every other way of reaching consumers on the Web. According to Nielsen, Internet ads are down slightly for the year, but I’d take the tracking company’s number here with several grains of salt.

[Image credit: Ken Ratcliff]

Under terms of the deal, a mix of new and library content from Univision, TeleFutura and Galavision TV programs will be featured and promoted throughout YouTube.

The deal, which marks the first time any Univision programming is available on the Web outside of its own properties, is part of YouTube’s effort to cater to one of the fastest growing segments of online users: The Hispanic community.

“We’ve seen 6.5 million Hispanic adults visit YouTube in the last year,” Chris Maxcy, head of content partnerships at YouTube, said during a call discussing the announcement. “That’s up 80 percent….To date our focus has mostly been on English language space….The Hispanic audience has been overlooked, yet it’s one of the fastest growing communities online.”

The official release:

UNIVISION BECOMES A PREMIER SPANISH-LANGUAGE CONTENT PARTNER WITH YOUTUBE

Partnership Marks One of the Most Comprehensive Deals of Full-Length Programming for YouTube and Brings YouTube’s Hispanic Community in the U.S. Top Programming from Univision’s Three Major Networks
NEW YORK, NY, November 16, 2009 — Univision Interactive Media, Inc., the digital division of Univision Communications Inc., the leading Spanish-language media company in the United States, today announced that it is partnering with YouTube to make short-length and long-form Univision videos available on the YouTube.com website.

“This is a very exciting milestone, as it represents the first time that any Univision programming is available on the Web outside our own properties in both a long and short form format,” said Kevin Conroy, president of Univision Interactive Media, Inc. “This partnership uniquely extends our reach to our audience and solidifies our position as the leading Spanish-language video provider for U.S. Hispanics with unparalleled programming in all respects.”

“Clearly, Univision has established itself as a premier provider of Spanish-language television content here in the U.S.,” said Chris Maxcy Head of Content Partnerships at YouTube. “This deal is a big win for us and marks one of the most comprehensive partnerships for full-length programming signed to date. There is a huge demand to watch Spanish-language content on YouTube. With this new partnership, our community here in the U.S. can watch and enjoy both short-length and long-form programming from Univision’s three major networks on our platform.”

Univision, TeleFutura and Galavisión television programs will be featured and promoted throughout the YouTube.com website. Content will be updated to include relevant offerings as well as an extensive archive of library programs. In addition to top Univision shows, users will have access to Univision.com videos across key content categories, as well as unique footage from Univision celebrity interviews and special events such as next year’s “Premio Lo Nuestro a la Música Latina” (Lo Nuestro Latin Music Awards). Univision will also be using YouTube’s leading Content ID technology to more effectively track user engagement and monetize Univision content uploaded by YouTube users.

This partnership solidifies Univision Interactive Media’s leadership position as it provides premier advertisers with unique sponsorship opportunities, including new inventory for display ads. This further establishes Univision Interactive Media as the ideal vehicle for advertisers to connect with U.S. Hispanics anytime, anywhere.

The companies might not have known about their invisible display ads–the kind that are supposed to appear alongside content on Web pages–if not for Ben Edelman, an assistant professor at Harvard Business School who studies Internet advertising.

Mr. Edelman says his research shows that all three marketers, and many others, have fallen victim to Web sites that use such ads as a way to sell more ad space than they have.

Read the rest of this post on the original site

The Citigroup (C) analyst spoke with PubMatic and the Rubicon Project, two “optimization” firms that help publishers manage inventory they hand over to ad networks. And both say they’re seeing continued upticks in sales and demand.

Pubmatic, for instance, says pricing has increased every month this year, and Rubicon says that they’re seeing demand from–believe it or not–travel and auto advertisers. Just as encouraging, buyers are actually making “longer-term” plans, which was unheard of in the darkest days of 2008 and 2009.

Both firms also reiterate the conventional wisdom that we’ve been hearing for the past 12 months: The money that is being spent is increasingly going to “performance-based” ads, which are paid for only when someone interacts with them. That’s another data point in favor of Google (GOOG), whose core product is performance-based.

Again: Things were so lousy a year ago and through the spring of 2009 that it’s prudent to take these kinds of data in stride.

And if you really want to be half-empty about it, you can note that the inventory Rubicon and Pubmatic sell is the cheapest real estate publishers have to offer. Which means it’s hard to say how various sites’ high-end real estate–the stuff they sell themselves–is doing.

We’ll get a better sense of that in about a month or so, during Q3 earnings season, when we get color from Web publishers like Time Warner’s (TWX) AOL and the New York Times (NYT).

But, as I said, this is supposed to be an optimistic post.

That factoid comes via Web-tracking service comScore (SCOR), which says the two sites accounted for 17.4 percent of the display ads in the U.S. market in July.

News Corp.’s (NWS) MySpace, in the midst of a turnaround effort, has a slight lead over Facebook–9.2 percent of the market versus 8.2 percent. That makes sense since MySpace has always been aggressive about loading up with ads, while Facebook has been fairly reticent, much to the dismay of the “when are you going to monetize?” crowd. (Click table to enlarge.)

That’s something you knew intuitively, of course. But interesting to see it in graphic form.

Another data point you already knew, but may still find worthwhile to see in black and white: Just how small the scraps are for the rest of much of the social network ad world. By comScore’s count, the next eight-biggest social networks command a collective 1.4 percent of the market. (By the way, ever heard of MocoSpace.com before? Do you know anyone who claims to be a user?)

Remember that we’re just talking about overall impressions, not dollars. And ad impressions on social networks are famously cheap, so this stat only tells part of the story. But it’s an important part. It illustrates the potential that the services have, even if they haven’t capitalized on it (not that they haven’t tried).

Meanwhile, here’s a bonus table from comScore laying out the top advertisers on social networks. No surprise to see the likes of AT&T (T) and Sprint (S) here. But perhaps it’s noteworthy that Verizon (VZ), the strongest U.S. telco, spends the least on social media impressions. Meanwhile, social network app makers/services like Zynga are spending heavily.

(News Corp. owns Dow Jones, which owns this Web site.)

GE’s (GE) NBC Universal, for instance, just posted second-quarter results that were as bad as its first quarter. Jeff Zucker’s TV and movie unit said revenue was down eight percent and profit down 41 percent for the three months ending June 30; in the previous quarter, revenue was down only two percent, while profit was down 43 percent.

Per usual, GE said NBC’s cable business was doing okay (which makes sense since it gets a guaranteed income stream from cable operators), but that its overall ad business and local TV markets were getting killed. Or in technical terms, they’re seeing “continued pressure.”

Three months ago, GE went out of its way to make the point that if you stripped out one-time charges like write-downs, its earnings drop would have only been in the 15-25 percent range. It may make the same argument again during the earnings call later this morning, so I’ll check back then.

UPDATE: Once again, NBC is arguing that its earnings aren’t that terrible. The company had to take nearly $100 million in charges this quarter, and last year it had some one-time gains. So really, the company argues, its earnings are down a mere 24 percent. Here’s the highlight reel from the earnings call. Note the lines about upfront sales being slow and Web display ads being hit. Click chart to enlarge.

It can’t say that anymore.

The Post says revenue at its flagship paper was down 22 percent in the last quarter and that print ad revenue was down 33 percent. That’s worse than the declines of 13 percent and 21 percent it posted in the previous quarter. And it’s lousier than the poor results the Times posted last month, when it reported that overall ad revenue had dropped 27 percent.

The same holds for the Post’s online business: Even in the good old days, it wasn’t growing fast enough to counter the decline at the print business. But now, online is declining, too.

Web revenue was down eight percent, because the classifieds business has been decimated. Online display ads, at least, were up a meager three percent. But last quarter, display ads were up 10 percent and the overall business was still growing five percent.

As usual, the real difference between the Post and the Times isn’t their performance but their corporate structure: The Times is pure-play media business that’s now choking on debt, while the Post is an education company (Kaplan) that happens to own a newspaper, which makes all of these grim results much easier to bear.

Here’s a survey of the rest of the Post’s business lines. Click on the image to enlarge.

In the old days, this might have qualified as news. But for the past year or so, Zenith Optimedia, along with just about every other ad forecaster, has been revising its forecasts downward every couple of months as the reality of the financial meltdown sinks in. So it’s hard to get worked up about this stuff.

More stuff you pretty much knew already: Online advertising is doing better than traditional ads.

Citigroup (C) analyst Mark Mahaney summarizes his chat with the CEOs of PubMatic and the Rubicon Project, which help online publishers sell inventory through ad networks. Their takeaway is that while pricing for online display ads has dropped dramatically in the past couple quarters–by as much as 50 percent in some cases–overall spending should remain flat this year. And as we all know, that’s the new up.

If you’d like to see concrete numbers from the ad market, hang tight until Thursday, when we’ll get earnings reports from two companies at the opposite end of the media spectrum: Gannett (GCI) and Google (GOOG).

One of the first duties for new Yahoo CEO Carol Bartz: Deliver a brutal fourth-quarter report card for the company she just inherited.

So says Citi (C) analyst Mark Mahaney, who predicts that Yahoo (YHOO) will post a one percent year-over-year decline in its core display ad business when it reports fourth-quarter earnings Jan. 27. That would be the first time that’s ever happened in the company’s history. Mahaney, in his best dry analyst-speak, describes that as a “significant negative.”

It also won’t be a huge surprise: As the chart above (click to enlarge) illustrates, Yahoo’s display advertising has been weakening throughout the year. The same has been happening to its peers, too: Time Warner’s (TWX) AOL may be about to post an 18 percent drop in its ad revenue.

Industrywide, Mahaney thinks, display ads will climb two percent this year. (That makes him an optimist in some quarters.)

And if Bartz does have to deliver lousy news, now is the best possible time to do it: This will get laid at the feet of Jerry Yang, Sue Decker and the economy in general.

Next quarter, though? A different story.