After high-single digit declines in revenue in 1Q22, we believe the worst for the ad market is behind us as Covid and macro overhangs seem to have bottomed in 2Q. Yet, 2H recovery outlook remains gloomy. We prefer performance ads over branding ads amid near-term uncertainty. Top pick Kuaishou. Negative1Q22: We estimate the China ad market declined by high-single-digits yoy in 1Q22, with online media ad revenue under our coverage declining 3.1% yoy and offline ads declining mid-double-digits yoy. Gloomy2H22: We think the two major overhangs on the ad market - Covid restrictions and the macro environment in China - both bottomed in May,and expect sequential improvement from June. However, we have low visibility on the pace and magnitude of a bounce-back in consumption growth or advertisers' optimism,as our checks so far indicate a mixed picture. Hence, we foresee a gloomy ad market recovery path,albeit the worst is behind us.