GroupM: Interactive Overtakes Newspaper Ad Spending

Interactive media will represent nearly one of every five dollars spent by marketers on media in the U.S. next year, according to estimates released Wednesday by WPP's GroupM unit, the largest buyer of media in the world. The agency holding company's new global ad spending forecast predicts interactive media, primarily online, will represent 17% of the U.S. advertising marketplace in 2010, up from 15.4% in 2009, and making.

That makes interactive the third largest medium in the U.S., behind television's 44.2% share, and magazine's 18.4% share of 2010 advertising budgets. According to GroupM's estimates, interactive media will overtake newspaper's U.S. advertising share this year. Newspapers, which had a 14.8% share of U.S. ad spending in 2008, will fall to a 13.6% share this year, and a 12.4% share next year. Interactive media had a 13.9% share in 2008.

Radio's U.S. advertising share also continues to erode, dropping to 5.6% this year, from 6.0% in 2008. GroupM predicts radio's share of U.S. ad spending will drop to 5.2% in 2010.

Out-of-home media spending remains steady at 2.7%.

While the U.S. isn't the largest interactive media marketplace in the world in terms of penetration, it is the biggest in terms of advertising volume. While the GroupM report does not break out the components of interactive media, it estimates that marketers will spend $23.9 billion on interactive media in the U.S. in 2010, representing 39.9% of the world's $59.9 billion interactive advertising marketplace.

The largest market in terms of interactive media penetration is the U.K., where British marketers will spend 30.9% of their advertising budgets on interactive media, followed by Denmark, where interactive media will have a 28.4% share next year. Ireland has the smallest interactive advertising penetration of any major Western industrialized nation, with a 3.0% share in 2010, up from just 1.8% in 2009.

Globally, marketers will invest 14.6% of their worldwide advertising budgets on interactive media, up from 13.2% in 2009.

GroupM Futures Director Adam Smith, the author of the new forecast, said the only other major media to increase share during the global advertising recession are TV and outdoor media.

"TV and out-of-home have both added share of global ad investment, while newspapers continue to shed a point of share a year," he noted in the report. "It may also be the case that TV and out-of-home's relative cheapness compared to newspapers has encouraged this, and perhaps newspapers have been less willing to flex pricing too."

Recommend (8)
2 comments about "GroupM: Interactive Overtakes Newspaper Ad Spending".
  1. Sam Yates from Yates & Associates , June 25, 2009 at 8:37 a.m.

    Joe, good information. I've been following the updates here for interactive trends in ad spending for quite some time. Actually, using your input (and that of those commenting) in building a series of online business news sites focused around a business forum concept. I would be interested in comments about its advertising viability.

    In a nutshell, the model for the sites (47 total) allows users to register for (name of state)BusinessForum.com at no charge. Users will then be able to upload business (and not for profits) news, photos, limited video. A blog is included along with regularly scheduled podcasts featuring business leaders/organizations specific to the state where the business forum is located.

    Attempting to fill the void being left by media cutbacks in business news, vanishing newspapers, etc. Media or anyone wishing to "republish" the news items may do so with credits to the business forum site. Have been approached by a number of existing print media in a few states who want to select news from their state's site and do a print version of the business forum in exchange for revenue sharing.

    Interested in your feedback on the concept.

  2. Sue Burton from Hydranetwork , June 26, 2009 at 6:05 p.m.

    Newspaper Advertising just can't do what interactive can. Where else can you use a CPA (Cost Per Action) model. With CPA, you only pay for the ads that convert to a lead, sale, form filled out, etc....Newspapers just can't compete when you only have to pay for the ads that work.