Broadcast Usurps Newspapers, Online Poised To Dominate

Despite broader issues in the overall economy, the media industry continues to be among the fastest growing industrial sectors in America. Long-term secular shifts, however, are altering the role of some major media and forms of advertising and marketing services, according to the 22nd edition of private equity firm Veronis Suhler Stevenson's annual Communications Industry Forecast. To underscore the fundamental shifts transforming the media economy, VSS notes that newspapers, long the dominant U.S. advertising platform, has fallen behind broadcast TV this year, which itself is poised to be usurped by the Internet within the next three years.

"If you look at the size of this shift going back to 2002, it's really remarkable," James Rutherfurd, executive vice president-managing director at VSS says of the shift taking place between traditional advertising media like newspapers, television and radio, and newer forms like online. "In 2002, traditional was 95% of the total. Now it's 85% of the total. By 2012, it will be 68%."



However, the new VSS report also reveals that traditional media effectively are morphing into new media as a greater share of Internet growth is coming from broadcasters and publishers migrating online vs. so-called "pure-play" Internet companies.

This year, VSS estimates that traditional media operators will account for nearly half (49.5%) of the $86 billion Americans will spend advertising and accessing content online. That share is up from less than a third (29.1%) in 2002, and is projected to take a dominant position by 2011 when pure-play Internet operators will account for less than half of all Internet revenues.

The migration of media operators mirrors that of major advertisers who have been slashing traditional media budgets and shifting a greater share of their total marketing spending online, and into alternative forms of marketing.

"Marketers have become more sophisticated, often reducing spending on a case-by-case basis while shifting dollars to alternative media that more efficiently reach target audiences, provide stronger return-on-investment metrics and generate immediate responses," the VSS report concludes, projecting that the shift to alternative advertising and marketing options is likely to accelerate over the next two years. VSS projects that ad spending on new media will climb 21% to $81.67 billion in 2008, and will account for 17.7% of total advertising and marketing spending, up from just 6.9% in 2002.

"By comparison, traditional advertising and marketing will inch up only 0.4% in 2008 to $378.48 billion, including a 1.8% decline in traditional advertising, despite the influx of political and Olympics advertising, as newspapers, consumer magazines and broadcast radio all post declines for the year," the report projects.

Next story loading loading..