Institutional and Alternative Media Underpins Ad Growth Forecast Following up last week's Mediapost review concerning projected out-of-home ad spending, with additional
details about the Total Communications Forecast from Veronis Suhler Stevenson, total communications spending is projected to increase 5.4% to $923.91 billion in 2008, as strong gains in the
institutional and alternative media sectors offset the downward pressure of declining traditional advertising spending.
These forecasted gains include important media trends:
- Broadcast TV will surpass newspapers as the largest ad medium in 2008, while total Internet ad spend will surpass broadcast TV in 2011
- Consumer media use declined
slightly in 2007 as some platforms near saturation, while institutional media use increased due to mission-critical information demand
- Total communications spending is forecast
to expand at a CAGR of 6.1% from 2007- 2012 to $1.2 trillion, fueled by continued growth in institutional and alternative media
Institutional media spending is expected
to increase 8.5% to $245.39 billion in 2008, according to the VSS Forecast. Total spending on communications will continue to outpace U.S. economic growth during the 2007-2012 period, increasing at a
6.2% CAGR compared with a 5.6% CAGR for nominal GDP. Communications will be the second-fastest growing of the 15 U.S. economic sectors during the forecast period and will exceed $1 trillion in 2010,
with spending reaching $1.183 trillion in 2012.
Jim Rutherfurd, Executive Vice President and Managing Director at VSS, says "... While current economic conditions are contributing
to the underperformance of traditional advertising and marketing segments, various institutional, consumer and alternative media segments are outperforming GDP due to... businesses demanding dynamic
workflow solutions for competitive global markets, consumers taking ‘staycations' this summer, spending on entertainment media targeted at the youth market, and brand marketers shifting to
alternative media to engage hard-to-reach demographics."
The study indicates that consumer spending on communications as a share of disposable income is expected to increase this
year.
- Spending on videogames is projected to climb at a double-digit rate
- The movie industry experiences its strongest summer on record
- Home video sales
and rentals increased during the first half of 2008 after declining in two of the past three years
- Total consumer spending on media is expected to increase 6.1% in 2008 to
$218.37
Spending on alternative media will climb 21.0% to $81.67 billion in 2008, and account for 17.7% of total advertising and marketing spending, up from 6.9% in 2002.
Traditional advertising and marketing will increase only 0.4% in 2008 to $378.48 billion, despite a 1.8% decline in traditional advertising, as newspapers, consumer magazines and broadcast radio all
post declines for the year.
This will be the first economic slowdown in which online search, digital out-of-home media, word-of-mouth marketing, videogame advertising, and social network
advertising will be seriously tested. As a result of these trends, VSS projects that broadcast TV will become the largest advertising medium by year-end 2008, the first time in U.S. history that
newspapers have not held that position.
For the third consecutive year, overall time spent with media by consumers is expected to fall in 2008, declining 0.1% to 3,493 hours per person, due to
media multitasking and several media platforms reaching saturation, including some that will become obsolete during the forecast period, including dial-up access, VHS, and audio cassettes. Time spent
with media that have a digital component, however, is expected to climb. Pure-play internet will surpass recorded music as the third most used medium after television and radio.
Meanwhile,
time spent by institutions on select media, such as professional information, business-to-business magazines, and outsourced corporate training, will continue to rise, climbing 4.2% in 2008 to 301
hours per employee, as technological advances allow businesses to access information 24/7. Time spent with media by consumers and businesses will rise 0.3% to 3,773 hours per person in 2012, driven by
gains in consumer and institutional media usage of digital platforms.
VSS projects that six segments will continue to exhibit double-digit gains over the next five years, while only newspapers
will exhibit a decline during the forecast period, falling at a 2.4% CAGR. Double-digit gainers are:
- Word-of-mouth marketing
- Pure-play internet & mobile services
- Branded entertainment
- Out-of-home media
- Outsourced custom publishing
- Professional & business information services
A synopsis of
communications industry spending and growth divided by the four major industry sectors and 20 different media segments tracked in the VSS Forecast is included here:
Communications Industry Sector Spending Projections |
Sector | 2012 Spend ($B) | 2007-2012 CAGR (%) |
Marketing Services | $307.30 | 5.80% |
Institutional End User | 341.6 | 8.6 |
Advertising | 262.61 | 4.3 |
Consumer End User | 272.41 | 5.8 |
Total
Communications | 1,183.37 | 6.2 |
Nominal GDP | - | 5.6 |
Source: VSS, PQ Media, August
2008 |
Communications Industry
Segment Spending Projections |
Segment | 2002-2007
CAGR | 2012 Spend ($B) | 2007-2012 CAGR |
Cable & Satellite TV | 10.4% | $188.92 | 7.35 |
Professional & Business Info Services | 11.3 | 206.49 | 10.0 |
Direct Marketing | 6.0 | 236.2 | 5.6 |
Entertainment
Media | 2.6 | 110.35 | 5.2 |
Newspaper Publishing | 0.3 | 55.3 | -2.4 |
Broadcast TV | 2.8 | 58.84 | 3.8 |
B to B Promotions | 3.8 | 52.47 | 2.5 |
Consumer Promotions | 3.2 | 53.87 | 3.3 |
Pureplay Web and
Mobile Services | 12.6 | 72.31 | 14.3 |
Educational & Training Media Services | 6.8 | 47.42 | 6.8 |
B to B Media | 4.8 | 32.95 | 5.9 |
Consumer Magazine Publishing | 2.8 | 25.52 | 1.0 |
Consumer Book
Publishing | 3.8 | 28.1 | 3.5 |
Branded Entertainment | 13.4 | 40.71 | 12.8 |
Broadcast & Sat Radio | 2.3 | 23.94 | 1.9 |
Yellow Page Directories | 1.4 | 16.57 | 0.7 |
Out-of-Home
Media | 10.3 | 12.89 | 10.3 |
Outsourced Custom Publishing | 16.5 | 9.21 | 11.0 |
Public Relations | 10.6 | 6.86 | 9.9 |
Word of Mouth Marketing | 49.8 | 4.47 | 27.1 |
Source: VSS, PQ Media, August 2008 |
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