• by Erik Sass  @eriksass1, August 4, 2009

Media executives hoping for a big recovery in ad spending after the recession ends may be overly optimistic, according to a new overview and forecast for the communications industry from Veronis Suhler Stevenson. VSS has traditional media continuing to decline, while paid media, including content targeting institutional end users (business information), is poised for sustained growth.

Total communications industry revenue is set to decline 1% in 2009, to $882.6 billion -- but the long-term picture is actually pretty cheery, according to VSS, which predicts an annual growth rate of 3.6% from 2008-2013.

This would make it the third-fastest-growing sector of the economy, behind mining and construction. The expansion will be driven, in part, by the build-out of pure-play consumer Internet, mobile services and subscription TV. In terms of content, communications industry growth will be driven by paid media targeting institutional end users, like business info and for-profit higher education and training, which is set to grow at an annual rate of 5.6% from 2008-2013.

VSS also sees renewed growth in K-12 media, consumer books (thanks to e-books), corporate training and B2B trade shows.

Marketing services will just about match the growth rate in the broader communications industry, with 3.4% annual growth from 2008-2013. But publishers and agencies will not necessarily share in the good fortune, VSS warns, as traditional advertising revenue will decline at an annual rate of 3.3% from 2008-2013.

VSS has eight out of 20 major communications industry sectors declining, all concentrated in the traditional media, including newspapers, magazines, broadcast TV, radio, traditional out-of-home and Yellow Pages.

The bright spot is digital and alternative marketing and advertising, which together will total almost $139.5 billion in 2013. Email marketing will grow by double-digits throughout the forecast period, contributing to an overall annual growth rate of 5.6% for direct marketing from 2008-2013.

Alternative segments, like branded entertainment and word-of-mouth, will enjoy a post-recession boom, with an annual growth rate of 12.6% from 2008-2013; VSS said branded entertainment in particular grew 12% to just under $25 billion in 2008, and will return to a cumulative annual growth rate of 9.3% from 2008-2013, putting total revenues for branded entertainment at about $38.9 billion in 2013.

Alternative advertising will grow at 12.3% over the same period, powered by online and digital out-of-home revenue.