• by Steve McClellan , August 3, 2011

A new "business climate" survey of communications executives from consultant KPMG reports that there is less optimism about the economy and employment in the sector going forward.

On the plus side, most of those surveyed -- nearly three-fourths -- predicted some revenue growth for their firms in the next year. And 44% said that digital-related products and services would be the key drivers to overall revenue growth.

The survey, conducted in May and June, quizzed over 100 mostly C-level executives from various sectors of the communications industry, including advertising agencies and media owners.

Among those surveyed, 47% said they anticipate their companies' head counts will increase this year. By comparison, 57% of those who participated in KPMG's business climate survey last year anticipated an increase. However, looking back, only 34% of this year's respondents said their companies had actually increased employment levels in the last 12 months.

And 41% said their companies had cut jobs in the last year, while 23% said they anticipate cuts over the next 12 months. Also, while 22% reported that employment had returned to prerecession levels, 34% said the head counts at their firms would never return to those levels.

A two-thirds majority said they now believe that a full national economic recovery will be delayed until 2013. Last year, most of those surveyed predicted a full recovery by 2012.

Paul Wissmann, KPMG's national sector leader for communications and media, stated that the survey results indicate that "companies are placing bets that now is the time to position and invest for growth, despite an uneven economic recovery."

While growth is anticipated, it is not expected to be huge in the near term. Nearly half of the respondents (47%) said they expected revenue gains at their firms in the next 12 months to climb a modest 1% to 5%. Another 32% were more bullish, predicting increases of between 6% and 20%.

Digital will be key, as 37% of respondents predicted growth in that sector of 10% or more, with another 21% forecasting a 7% to 10% growth in their firms' digital coffers.

Within the digital realm, KPMG's survey indicated that 44% ranked new distribution methods among the top three revenue drivers going forward, while 43% placed social media platforms among the top drivers and 37% ranked online advertising among the top three. Also, three-fourths expect cloud computing to have a transformational impact on their business in the next few years.

The survey also found that mergers and acquisitions will continue to play a major role in the business. Nearly 70% said they expected their companies to be involved in a merger or acquisition in the next two years.

Wissmann stated that companies are "focused on investing in technology and products through both organic growth and mergers and acquisitions to beat the competition and grab emerging opportunities."