Advertising Sales Shift to New Media
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Written By Drupad Sil | August 7, 2007 | Share This
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Private equity firm Veronis Suhler Stevenson (VSS) today released a report forecasting a shift in communications spending from traditional to alternative media. Among the key findings headlining the report, internet advertising is expected to become the largest ad segment in 2011, surpassing newspapers. The report’s findings come on the tail end of declining advertising sales posted by newspaper groups this year despite continued growth in the U.S. economy.
The VSS study predicts a greater than 21% yearly increase in online advertising, reaching $62 billion in 2011. Comparatively, newspaper ads are expected to reach $60 billion in 2011, falling behind its online counterpart for the first time in history. Broadcast television and cable and satellite television combined will be worth a predicted $86 billion in 2011, far and away the largest share of advertising dollars. Interestingly, the report also notes the time lag between average time spent by consumers utilizing different types of media, and the corresponding advertising dollars spent on each type of media. For example, online advertising spending is expected to overtake newspaper advertising spending in 2011, but time spent online is expected to overtake time spent reading the newspaper by the end of 2007.
Also of note is the fact that this shift to digital and online media is global, and is occurring faster than in the U.S. in some areas. Online spending in the U.K. and Sweden is expected to overtake newspaper spending in those countries this year, emphasizing the media transition. Another trend highlighted by the study is that the average time spent consuming media is down half a percentage point, to 3,530 hours per person per year. The reason for this is an increase in the amount of time spent online, where users spend an average of 5 to 7 minutes watching videos, and a decrease in time spent in front of the TV, where users spent an average of 30 minutes per session.
James Rutherfurd, Executive Vice President and Managing Director at VSS describes the change in the advertising industry:
“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. 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.”
‘Alternative Advertising’, as VSS terms online and digital media advertising, posted strong growth from 2001 to 2006 after a slight recession from 2001 to 2002. Several subsections of the industry posted double-digit growth in spending, including outsourced custom publishing, branded entertainment, and pure-play Internet and mobile services.
The trend is largely unsurprising. Indeed, there are some estimates floating around that online advertising will be dominant in the industry globally by 2021. We’ll have to wait and see if that’s the case, but the current trend data certainly makes it more than likely.
Topics: Advertising: Behavioral, Advertising: Offline, Advertising: Online |
eMarketing is growing rapidly, while other traditional media is flat or declining. Television has peaked as the Internet market share continuous rapid growth. Why? because of TIVO, and for many markets the consumers are spending as much time on the Internet as they do on TV. The Internet can be interactive, and personalized, and measurable, while TV cannot.