Analyst Imran Khan says he talked to 20 ad buyers and planners, who control a collective $1.6 billion in ad spending, and they tell him that they’ll spend more in the second half of 2009 than they did in the first six months. But that’s not useful information, since ad spending is traditionally weighted that way.

More tellingly, Khan’s correspondents tell him they think spending will be “roughly flat to down” in the last six months of 2009, compared to 2008. And as we’ve discussed before, ad spending started plummeting in the second half of 2008. So if it isn’t improving now, that’s unpleasant news.

More pleasant: Things should get better next year:

2010 ad budgets are looking positive. 25% of respondents see upside of 5-9% in 2010 and an additional 25% see upside of 10-14% vs. 2009. Approximately 40% think that ad spend in 2010 will be roughly flat with 2009 levels.

Looking for more concrete data? Wait a week. Earnings season kicks into high gear Thursday, Oct. 15, when Google (GOOG) hands in its Q3 report card; in the following weeks we’ll also get updates from big media players, including Yahoo (YHOO) and Time Warner (TWX).

Khan’s estimate is the first one I’ve seen floated in public so far. The analyst has proven to have a pretty good grip on AOL’s business to date, so I’m taking it seriously.

But for the record, note that not only is the $4 billion number a pittance of the company’s value during the original Web boom (remember those days?), it’s also marked down from the $5.5 billion Google assigned to the company when it wrote down its five percent stake earlier this year. Which was, of course, a markdown from the $20 billion value Google (GOOG) had given it in 2005.

UPDATE: Pali Capital’s Rich Greenfield also pegs AOL at “around $4 billion.” Greenfield is also in the growing group of people who think Time Warner is likely to sell off its Time Inc. publishing unit. I think otherwise, but this will be interesting to watch.

Here’s how Khan got to his number (click chart to enlarge).

Per usual, you can either argue that these modest gains are good news for Microsoft (MSFT), especially because they come after months of declines. Or you can argue that they are way too modest, given the hype and the media blitz that accompanied the launch.

My question: If you’re Carol Bartz and company and you’re about to launch a Bing-sized marketing campaign of your own, do Microsoft’s results give you encouragement or pause?

Again, the half-full argument is that the Bing blitz proves that given enough brute force, you can indeed use offline advertising to change online behavior, at least in the short term.

Half-empty: At least Microsoft’s pitch has an intriguing come-on–”Hey you! We’ve got a search engine that works better than Google (GOOG)! Come see for yourself!” But unless I’m missing something, there’s nothing equally compelling powering Yahoo’s “Its You!” push.

Maybe I’m wrong: Yahoo (YHOO) formally takes the drapes off its campaign this morning at a series of Advertising Week events. I’ll report back a little later today.

In the meantime, here are the newest comScore (SCOR) numbers, courtesy of JP Morgan’s Imran Khan (click on table to enlarge):

[Image credit: Seattle Municipal Archives]

Wal-Mart is adding three outsiders to its sales mix, which it says will add an additional one million items to its inventory, and the company plans to add more in the future. Is this a problem for either Amazon (AMZN), which features some third-party sales, or eBay (EBAY), which offers nothing but?

Maybe one day, but not in the near future. That’s primarily because Wal-Mart is so far behind the big guys. The $1.7 billion Wal-Mart did in Web sales last year makes it the 13th biggest online store in the U.S. Chart via JP Morgan’s Imran Khan:

And even if Wal-Mart’s new partners do boost sales significantly, the ecommerce market is likely to grow even faster. Bernstein analyst Jeffrey Lindsay expects U.S. online retail to grow by $13 billion in 2010 and another $19 billion in 2011. So don’t expect to see Wal-Mart’s Web foes wiping their brows just yet.

[Image credit: PinkMoose]

So bear this in mind when reviewing the newest comScore (SCOR) search numbers, which show Microsoft (MSFT) continuing to make modest search share gains. Bing is now up nearly a full point since May, when Microsoft introduced the new “decision engine.”

If you’re in glass-half-empty mode, you can complain that the blitz of publicity (free and paid) for Bing should have moved the needle farther. But if you’re a half-full type, you can argue that there is a very large swath of people–even those with a passing interest in the Internet–who have no idea Microsoft has a new search engine. Which means there is a very large swath of potential converts.**

Here are the July data, courtesy of JP Morgan’s Imran Khan. Note that both Google (GOOG) and Yahoo (YHOO) saw share drop by 0.03 percent (click chart to enlarge):

And if you’ve already had your fill of the Bing ad blitz, brace yourself. Barclays analyst Doug Anmuth predicts another deluge in a few months “as we move closer to the holiday season, specifically highlighting the Cashback program and other differentiated features.”

Here’s the Bing spot that left my fellow moviegoer bemused (note that the ad has its own overlay ad at the 10-second mark for…Bing):

*Kafka At the Movies minireview: Way better than “Punchline.” And if you like your Adam Sandler angry (which I do) and your Seth Rogen slimmer (meh), you’ll be happy. But at two-hours-plus, way too long.

**Alternate take: You might worry that Microsoft’s decision to describe Bing as a “decision engine” may be confusing potential converts.

That projection comes from a survey of Web users that Internet analyst Imran Khan commissioned last month. Khan’s survey found that 37 percent of respondents were familiar with the Kindle. And of that group, five percent said they already owned one of the devices, and another 15 percent said they expect to buy one within the next year. Extrapolating those results for the U.S. population, Khan figures that Kindle ownership will hit 10 million in the next 12 months. (Click chart to enlarge)

OK. But what if Amazon (AMZN) dropped its proprietary ebook format, a supposed weakness that competitors Sony (SNE) and Plastic Logic are trying to take advantage of by agreeing to use an open, common standard? Won’t matter that much, say Khan’s respondents: Only 15 percent of people who say they don’t plan to buy a Kindle cite format issues as a concern. I’m surprised the number is that high.

On a related note: Whatever happened to Amazon’s plan to work with the New York Times (NYT) and the Washington Post (WPO) to bundle newspaper subscriptions with its jumbo-sized Kindle DX reader?

When Amazon unveiled the DX in May, it briefly mentioned plans to sell the $489 machine at a discount to people who bought subscriptions to the Times, Post or Boston Globe, but didn’t say much more than that. Details were supposed to be released “this summer.”

Now we’re midway through August and we haven’t heard a peep about the program. What gives? I asked Amazon, the Times and the Post, and none of them had anything to say–save for a comment from a Post rep who said that the subscription-plus-discount offer would be “a small experiment.”

My gut: Not a needle mover.

The summary for June: Google (GOOG) is flat, and so is IAC’s (IACI) Ask and Time Warner’s (TWX) AOL. And Yahoo (YHOO) is down. Microsoft’s increase of 0.4 percent, to 8.4 percent, looks to have come at the expense of Yahoo, which dropped from 20.1 percent to 19.6 percent.

Yesterday, JP Morgan’s Imran Khan (who supplied us with these data today) predicted that Bing would eventually boost Microsoft by two percent, at the expense of AOL and Ask (click charts to enlarge):

The bad news for Microsoft: For most people, Google is already working just fine.

Details from JP Morgan’s (JPM) Imran Khan, who commissioned a survey of search users a month after Bing’s launch: 59.1 percent of respondents have heard of Microsoft’s (MSFT) new search engine and 24.9 percent of them have tried it. And people who tried it, liked it, just like Mikey (if that doesn’t mean anything to you, see video below, from ye olden days).

But Khan says these are samplers, not switchers: Only four in 10 Bing users turned to the search engine more than five times in the last month.

The problem here is that for most people, there’s no problem with Google (GOOG), and no reason to make a permanent switch.

Khan:

We think the biggest impediment to Bing’s attempt to gain market share is that the majority of people are perfectly happy with their current search experience. 62.6% of participants claimed that there were no factors that they would improve on their current search experience. As such, we think it will be more difficult for Microsoft to disrupt current user habits.

At best, Khan figures, Bing may help Microsoft claw its way to a two percent search share gain, but that would likely come at the expense of IAC’s (IACI) Ask and Time Warner’s (TWX) AOL.

The only way for Redmond to really move the needle would be even more expensive than the $100 million marketing outlay it has already committed: Building up its content business (that’d be you, Scott Moore), or ponying up for another distribution deal–which my employers at News Corp. (NWS) hope means them.

In order to gain meaningful market share, we believe Microsoft has to 1) create a markedly better product, 2) significantly expand its distribution (it will cost them higher TAC), or 3) invest heavily in content development to build out O&O properties. We believe that time spent on MSN O&O properties could lead to better search market share. While we expect competition in the search market to increase, we think it will be difficult to shift search behavior if people are completely satisfied with their current search engine. Of the above approaches, we think it is most likely that Microsoft will search for distribution deals to support this product launch.

Other key data points from Time Warner’s (TWX) Q4 report card:

Overall revenue at AOL dropped 23 percent (the remainder of the decrease stems from AOL’s evaporating but still substantial dial-up business). But operating income, before accounting for a gigantic write-off the company had preannounced, actually increased six percent. So if new sales boss Greg Coleman, last seen at Yahoo (YHOO), can make even modest progress in the next couple months, AOL will be able to limp along for a bit longer.

But not before more overhauls: Time Warner announced that it has earmarked another $250 million for restructuring charges at AOL and its Warner Bros. movie studios in 2009.

Time Inc.’s ad revenues dropped 20 percent, and adjusted operating income dropped 70 percent. But you can’t pin all of that on Ann Moore and company: Time had to take a $57 million charge on rent that Lehman Bros. (R.I.P.) won’t be paying to lease space at the company’s midtown office.

TIme Warner’s network TV business–HBO and Turner Broadcasting–did just fine. Gangbusters, really, by today’s standards: Revenues were up nine percent, including a seven percent bump in ad revenues.

Want to see the numbers for yourself? Click the table below to enlarge, or read the full release:

Why? Because DVD sales have been on the down slope for quite some time and because no one seems to have much interest in Blu-ray, the expensive new DVD format pushed by Sony (SNE), which was supposed to replace DVDs as Hollywood’s cash cow.

And because, while people are more likely to spend time huddled around the TV these days, that doesn’t mean they’re going to actually buy movies–they may rent them, which is good for the likes of Netflix (NFLX), but doesn’t do much for Hollywood.

So who gets hit worst? Khan has ranked the major media conglomerates by their exposure to home entertainment, expressed as a percentage of earnings*:

Viacom (VIA): 21 percent

Time Warner (TWX): 20 percent–or 10 percent if you include the company’s contribution from its Time Warner Cable spinoff

News Corp. (NWS): 18 percent

Disney (DIS): 15 percent

All things being equal though, you’re probably still better off tied to the DVD business, which is slowing, than the ad business, which is disappearing.

Case in point: Viacom shares are down 60 percent in the last year. But that looks fantastic compared to the performance of sister company CBS (CBS), which is down 80 percent. And yes, I’m trying to argue that being down 60 percent is the new up. But that’s where we are these days.

*Khan uses different definitions of earnings–sometimes he’s talking about EBITDA, sometimes OIBDA, etc.–for different companies. Chances are you don’t care.

J.P. Morgan’s Imran Khan does some quick math and concludes that what Time Warner (TWX) is really saying is that ad revenue at AOL dropped 18 percent in the last quarter (see below for math). That’s awful, but believable: AOL ad revenue dropped six percent in the previous quarter, and as I noted last fall, those results only included a couple weeks of flat-out economic collapse.

This obviously doesn’t augur well for the rest of the Internet ad business, either. But only the most die-hard optimist thought that the Web was going to survive this thing unscathed anyway.

No comment from Time Warner on Khan’s math. We’ll see actual numbers Feb. 4, when CEO Jeff Bewkes announces the company’s year-end earnings results.

Khan’s estimate, from his note:

“We estimate that advertising revenue shortfall at AOL is at least $64M implying an 18.4% Y/Y advertising revenue decline. We make the following assumptions to arrive at this estimate: (1) we assume that half of the 1% shortfall in Y/Y Adjusted OIBDA growth that TWX press release attributes to both Publishing and AOL is due to online ad revenue shortfall; and (2) we assume a 100% incremental margin.”

How much did you spend on Friday, and where did you spend it?

We’re likely to see flash analysis of today’s shopping binge before the weekend is over. But J.P. Morgan’s Imran Khan has already called a winner for the holiday: Amazon.

Khan’s firm commissioned a study of 766 U.S. consumers about their holiday shopping plans, and 44 percent of them say they’ll be spending less this year. And those that say they’re cutting back say they’ll cut back a lot–an average of 41 percent from previous years.

So Khan figures that overall, holiday shopping will be down “high single-digits to low double-digits” compared to last year.

But there’s one-in-two chance that when you do shop, you’re going to end up buying something at Amazon (AMZN), Khan says:

Nearly 50 percent of respondents plan to shop at Amazon.com this holiday season, and Amazon’s reach is 39 percent higher than its nearest competitor.

Amazon continues to pull in very high percentages of users earning more than $100K, with 59 percent of shoppers in that income category saying they had shopped there; no other site’s reach among that group was above 33 percent.”

And while I’m in lemonades-out-of-lemon mode, I’ll note that Khan also predicts that e-commerce spending will be flat over the holidays.

Given that we saw two reports over the last week (one from MasterCard, another from ComScore) that said that e-commerce was already shrinking compared to last year, that would be good news indeed.

A year ago, the conventional wisdom said that the online advertising market would still grow in an economic slump because online ads were cheaper and more effective.

And they are. But if the slump is big enough– like the one we’re in now–then all bets are off.

Which is why there’s no longer any conventional wisdom about the future of online ads. Two data points, and one anecdote:

• J.P. Morgan (JPM) Internet analyst Imran Khan has reduced his projections for ad growth for the second time since September. But he’s still projecting growth. In fact, Khan sees overall spending, fueled by search ads on Google (GOOG) and Yahoo (YHOO), growing 13 percent in 2009, down from a previous projection of 19 percent. But he thinks display ads will fare much worse, noting U.S. spending on display will only grow six percent in 2009, down from his earlier forecast of 16 percent.
• Ad network optimizer The Rubicon Project reports that the average price for an online ad at “thousands of sites and 270 ad networks” dropped 11 percent in the last quarter. But since it can also find evidence of prices increasing at some sites–news and reference sites, for instance, increased prices 36 percent–Rubicon argues that things aren’t so bad after all.
• Gawker Media publisher Nick Denton thinks everyone who doesn’t see misery next year is delusional, period. The man behind sites like Gawker, Gizmodo and Valleywag happily offered this insight at the Silicon Alley Insider/Founder’s Club event last week, which was packed with digital movers and shakers. All of them should be terrified, he said, charmingly: “Anyone who isn’t prepared for ads to go down 40 percent is crazy.” Obligatory disclaimer here: Denton is always seeing doom just around the corner. But he’s very convincing.

Want a (slightly) more upbeat spin? Here’s Khan’s executive summary:

* Overall ad budgets continue to weaken. Since we reduced our estimates on September 4th, we have seen a further slowdown in the economy, particularly in the last two weeks of the third quarter. Weakness continued into October and spread from the US and UK throughout continental Europe and Asia. Additionally, dollar strength was greater than expected which will further depress growth rates. We are now basing estimates on a $1.25 exchange rate vs. our prior base of $1.40. Our updated model calls for total online global advertising growth of 25% in F’08 and 13% in F’09 vs. our prior estimates of 28% and 19% Y/Y growth respectively.

* Deterioration of display advertising is more pronounced than expected. Our channel checks are showing that sell-through is declining. Additionally, so far CPMs for premium inventory are flat to slightly down. Looking forward, we think CPMs will remain depressed and sell-through rates will worsen.  As a result, we are lowering our F’08 and F’09 domestic display estimates to $7.95B (11 percent Y/Y growth) and $8.45B (6% growth) from $8.15B (14% Y/Y growth) and $9.43B (16 percent growth). We are now modeling F’08 global display ad growth of 14% Y/Y vs. our prior estimate of 16% growth.

* Search performance held up in 3Q but we expect ad budget cuts to bleed through. We continue to see performance-based advertising holding up better than banner advertising. Long tail advertisers continue to allocate additional dollars to search. However, keyword price inflation is moderating. Additionally, we think marketing spend pullback in some segments including travel, telecom, autos, and retail is worsening. As such, we are lowering our domestic F’08 and F’09 search growth estimates to 23.4% Y/Y and 17.3%, respectively, from 27.4% and 25.5% Y/Y growth. We are modeling F’08 global search ad growth of 34% vs. our prior estimate of 36% Y/Y growth.”