VSS Releases Annual Communications Forecast

NEW YORK, August 5:
Private-equity firm Veronis Suhler Stevenson (VSS) has forecast that broadcast
TV will surpass newspapers as the largest ad medium in the U.S. this year,
while Internet advertising will exceed broadcast TV in 2011.

The predictions are part
of VSS’s Communications Industry Forecast 2008-2012. The report estimates that total communications
spending will increase 5.4 percent to $924 billion this year, rising to $1.2
trillion by 2012.

“The U.S. communications
industry has proven to be resilient during difficult economic periods over the
last several decades because of the diverse portfolio of spending derived from
the institutional, consumer, advertising and marketing sectors,” said Jim
Rutherfurd, the executive VP and managing director at VSS. “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 several factors. Among
them are businesses demanding dynamic workflow solutions for competitive global
markets, consumers taking ‘staycations’ this summer and spending on
entertainment media targeted at the youth market, and brand marketers shifting
to alternative media to engage hard-to-reach demographics.”

The highest rate of growth
is expected in the institutional sector, including business information
services, with spending forecast to increase to $341.1 billion in 2012.
Spending on marketing services will rise to $307.3 billion, while advertising
is expected to be up 4.4 percent to $262.61 billion in 2012. Consumer spending
on the communications sector, meanwhile, is forecast to reach $272.4 billion.

Brands are expected to
continue shifting budgets from traditional to alternative advertising and
marketing vehicles in 2008 and 2009. Spending on alternative media will climb
21 percent to $81.67 billion in 2008, and account for 17.7 percent of total
advertising and marketing spending, up from 6.9 percent in 2002. Traditional
advertising and marketing, however, will be up less than 1 percent this year to
$378.48 billion, with declines for newspapers, consumer magazines and broadcast
radio.

Time spent with media by
consumers and businesses will rise 0.3 percent to 3,773 hours per person in
2012, driven by gains in consumer and institutional media usage of digital
platforms.

—By Mansha Daswani