Communications Industry Exceeding Expectations
According to the VSS Forecast Mid-Term Update by Veronis Suhler Stevenson (VSS), total U.S. Communications Industry spending increased 4.2% in 2011 and is on pace to grow at an accelerated 5.6% in 2012, reaching $1.185 trillion and outpacing GDP growth of 4.4%. These findings are spurred by an improving economy and stronger-than-expected results across all digital media, says the report.
The study reports that total Communications Industry spending was up from a base of $1.076 trillion in 2010. VSS estimates total spending will reach $1.419 trillion in 2015, representing growth of $343 billion, or 31.8% point to point, and a 5.7% Compound Annual Growth Rate.
Several industry segments are projected to outperform GDP growth of 4.4% in 2012, including:
- Pure-Play Consumer Internet & Mobile Services (18.1%)
- Public Relations & Word-of-Mouth Marketing (14.6%)
- Broadcast Television (9.3%)
- Subscription Television (7.7%)
- Branded Entertainment (7.5%)
- Out-of-home Media (7.2%)
- Business & Professional Services (7.1%)
- Outsourced Custom Content (6.7%)
- Business & Professional Services (5.6%)
- B-B Media (5.5%)
- Education & Training Media & Services 5.3
Source: VSS 2011-2015 Mid-Term Update, April 2012
John Suhler, Co-Founder and President of VSS, says, “... this is the best news for the industry in several years... both consumers and businesses begin to expand their use of a variety of communications platforms and tools such as mobile devices and tablets... “
US Communications Industry Spending in 2015 ($ in Billions)
Spending in 2015
Business & professional information and services
Education & training media and services
Entertainment & leisure media
Traditional consumer advertising media
Source: VSS 2011-2015 Mid-Term Update, April 2012
Of the 20 Industry Segments as defined by VSS, 11 are projected to outperform GDP growth in 2012. Only three segments – Consumer Book Publishing, Newspaper Publishing and Local Consumer Directories – were downgraded in the mid-year review.
While growth estimates for five of six Industry Sectors, groups of industry segments sharing characteristics based on primary revenue streams, outpaced expectations for 2011 and 2012, Sectors with the most dramatic changes included Targeted Media and Traditional Marketing:
- Targeted Media in 2012, which includes direct marketing, branded entertainment, outsourced custom content, pure-play consumer internet & mobile services, and business-to-business (B-to-B) media, has been revised upward from the original 7.7% growth projection in the annual VSS Forecast to 8.1%
- The 2010-2015 CAGR is adjusted from 7.9% to 8.4%, reaching $278.4 billion to reflect expectations of stronger growth for most digital components within the sector, including e-custom publications, e-media in B-to-B media, and the entire pure-play consumer internet & mobile services segment.
- Traditional Marketing, which includes consumer promotions, B-to-B promotions, public relations and word-of-mouth marketing, has been revised upward from 3.1% to 3.8% in 2012. The 2010-2015 CAGR for Traditional Marketing from 3.6% to 4.2% to reflect anticipated acceleration in spending on Traditional Marketing during the latter part of the forecast period, reaching $86.6 billion.
- Business & Professional Information & Services in 2012, which includes business & professional information (BPI) and business & professional services (BPS), will slightly exceed the original VSS Forecast published last September, climbing from 6.3% to 6.4%. Key trends to provide employees with must-have information, data and workflow tools to increase efficiency and profitability raise the 2010-2015 CAGR from 6.5% to 6.8%, with spending reaching $247.2 billion.
- Education & Training Media & Services sector is expected to grow slightly through 2012 from 5.2% to 5.3%, according to the report, driven by increased spending on outsourced corporate training. The 2010-2015 CAGR has been revised upward from 5.2% to 5.4% to reflect these factors, reaching $293.0 billion.
- Entertainment & Leisure Media, which includes subscription television, entertainment media (TV programming, home video, videogames, recorded music, box office) and consumer book publishing, is the only industry sector to be downgraded in the report. While there will be gains in box office and branded digital platforms, such as online and mobile videogames, it will not be enough to help offset prolonged weak results in the printed book market, says the report.
- The growth rate of 5.8% forecast for the sector in 2012 was trimmed to 5.7%. The 2010-2015 CAGR was also cut from 5.6% to a 5.5%, reaching $353.9 billion, as strong growth in videogames, driven by the release of new console hardware during the forecast period and a faster-than-expected stabilization in the recorded music industry, will help mitigate the projected deeper declines in print consumer books.
- Traditional Consumer Advertising Media, which includes broadcast television, newspaper publishing, consumer magazine publishing, broadcast & satellite radio, local consumer directories, and out-of-home media does not change from the projected 2.6% growth rate for 2012 spending.
While the ad market in the first half of 2012 is expected to remain sluggish, record-breaking political and Olympics advertising will drive growth for the remainder of the year, concludes the report. The 2010-2015 CAGR was also left untouched at 1.9%, with spending reaching $160.4 billion because although the projected decline in print advertising will be deeper than initially expected, it will be offset by increases in internet and mobile advertising offerings of branded traditional media.
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