Total communications spending increased 6.8% to a record $885.2 billion in 2006, having expanded at a compound annual growth rate (CAGR) of 5.9% from 2001 to 2006 (and exceeding GDP growth in both periods), according to exclusive data released today by Veronis Suhler Stevenson (VSS).
Communications spending growth accelerated in 2006, outpacing nominal GDP for the fourth time in five years, while consumer media usage declined following two consecutive years of decelerating growth, according to the VSS Communications Industry Forecast 2007-2011.
The VSS forecast tracks, analyzes and forecasts spending, usage and trends in all 19 segments and more than 100 sub-segments of the US media industry, including alternative advertising and marketing data licensed exclusively from PQ Media.
According to the VSS data and forecast:
- The communications industry is on pace to grow 6.4% in 2007 and post a CAGR of 6.7% in the 2006-2011 period, making it the third-fastest-growing sector of the US economy.
- Communications spending will top $1 trillion for the first time in 2008, with growth driven by strong gains in the alternative media and institutional end-user sectors.
- Total communications spending is forecast reach $1.222 trillion in 2011.
- In what would be a watershed moment in communications history, internet advertising – including pure-play websites and digital extensions of traditional media – will replace newspapers as the largest ad medium in 2011.
- For the first time since 1997, consumers spent less time with media in 2006 than they did the previous year:
- Media usage per person declined 0.5% to 3,530 hours, due to changing consumer behaviors and digital media efficiencies.
- The drop in consumer media usage was driven by the continued migration of consumers to digital alternatives for news, information and entertainment, which require less time investment than their traditional media counterparts.
- Consumer media usage to stabilize in 2007 and increase at a CAGR of 0.5% from 2006 to 2011, compared with 0.8% in the previous five-year period.
- Consumers are also migrating away from advertising-supported media, such as broadcast TV and newspapers, to consumer-supported platforms, such as cable TV and videogames:
- Time spent with consumer-supported media grew at a CAGR of 19.8% from 2001 to 2006
- Time spent with ad-supported media declined 6.3% in that period.
- However, media usage by institutional end-users grew 3.2%, to 260 hours per employee, in 2006, according to the first-ever analysis of business and government media usage included in this year’s VSS Forecast:
- Institutional media usage climbed at a CAGR of 3.3% in the 2001-2006 period, driven by the continued integration and increased use of online and digital platforms to enhance business performance and workflow.
- Institutional media usage will continue to grow from 2007 to 2011, although growth will decelerate slightly as the forecast period progresses.
- The fastest-growing media segments in the 2001-2006 period were outsourced custom publishing, branded entertainment; cable, satellite and RBOC TV services; and pure-play internet and mobile services, all of which posted double-digit growth.
“We are in the midst of a major shift in the media landscape that is being fueled by changes in technology, end-user behaviors and the response by brand marketers and communications companies,” said James Rutherfurd, EVP and managing director at VSS.
“We expect these shifts to continue over the next five years, as time and place shifting accelerate while consumers and businesses utilize more digital media alternatives, strengthening the new media pull model at the expense of the traditional media push model.”
More data from the VSS forecast (via MediaPost):
- Internet ad spending will reach $61.98 billion in 2011, when it will surpass newspapers to become the largest ad medium.
- Consumers spent, on average, 1,631 hours in 2006 with consumer-supported media (e.g., web, videogames), up 19.8% from 2001.
- Time spent with ad-supported media (e.g., broadcast television, magazines) was down 6.3% from 2001, averaging 1,899 hours per person in 2006.
- Ad spending on pure-play internet sites totaled $15.1 billion in 2006; spending is forecast to grow at a 2006-2011 CAGR of 18.2%, reaching $34.78 billion in 2011.
- Ad spend on traditional-media internet sites will growth at a 25.79% CAGR, growing from $8.585 billion in 2006 to $27.2 billion in 2011.
- National internet advertising – search, display, sponsorships, etc. – is projected to grow from $16.9 billion in 2006 to $38.9 billion in 2011, or a CAGR of 18.2%.
- Blog, podcast and RSS ad spend is projected to reach $1.14 billion in 2011, from $0.78 billion in 2006 – accounting for the highest CAGR: 70.9%.