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.
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New York, NY (PRWEB) August 7, 2007
While communications spending growth accelerated in 2006, outpacing nominal GDP for the fourth time in five years, consumer media usage declined following two consecutive years of decelerating growth, according to exclusive data released today by Veronis Suhler Stevenson (VSS), a leading private equity firm dedicated to the media, communications, information and education industries.
Total communications spending increased 6.8% to a record $885.2 billion in 2006 and expanded at a compound annual growth rate (CAGR) of 5.9% from 2001 to 2006, exceeding GDP growth in both periods, according to the VSS Communications Industry Forecast 2007-2011 (VSS Forecast), the 21st edition of the leading source for media spending, usage, and trends data. VSS tracking data for the first half of 2007 indicates that the communications industry is on pace to grow 6.4% this year and will post a CAGR of 6.7% in the 2006-2011 period, making it the third fastest growing sector of the U.S. economy. Strong gains in the alternative media and institutional end-user sectors are expected to drive growth, as communications spending tops $1 trillion for the first time in 2008. In what would be a watershed moment in communications history, VSS predicts that 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, as media usage per person declined 0.5% to 3,530 hours, due to changing consumer behaviors and digital media efficiencies, according to the VSS Forecast. 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. VSS expects 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.
The VSS Forecast is the only source to track, analyze and forecast spending, usage and trends in all 19 segments and more than 100 sub-segments of the U.S. media industry, including alternative advertising and marketing data licensed exclusively from PQ Media. The VSS Forecast also features the industry’s most accurate spending forecasts, producing a margin of error of +/- 2% for 9 of the last 10 years. The margin of error for the 2006 forecasts was + 0.4%.
In addition to shifting their attention to alternative media, 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 percent from 2001 to 2006, while time spent with ad-supported media declined 6.3 percent in the period.
While consumers spent less time with media in 2006, media usage by institutional end-users grew 3.2 percent to 260 hours per employee, 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.
“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, Executive Vice President 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.”
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 (see segment breakdown at http://www.vss.com/forecast07).
VSS projects total spending on communications will expand at a CAGR of 6.7% in the 2006-2011 period, outpacing U.S. economic growth and accelerating over the 2001-2006 industry performance. Communications spending will exceed $1 trillion for the first time in 2008 and reach $1.222 trillion in 2011, according to the VSS Forecast.
For a synopsis of U.S. communications industry spending by sector and segments, please see http://www.vss.com/forecast07.
About Veronis Suhler Stevenson
Veronis Suhler Stevenson (http://www.vss.com) is a private equity firm that invests buyout and structured capital funds in the media, communications, information and education industries in North America and Europe. VSS provides capital for buyouts, recapitalizations, growth financings and strategic acquisitions to companies and management teams with a goal to build companies both organically and through a focused add-on acquisition program. To date, VSS equity and structured capital funds have invested in over 54 platform companies, which have in turn completed over 230 add-on acquisitions resulting in a portfolio with realized and unrealized enterprise values in excess of $12 billion. VSS has published the Communications Industry Forecast for 21 years.
About PQ Media
PQ Media (http://www.pqmedia.com), the leading provider of alternative media econometrics, partners with Veronis Suhler Stevenson on the annual VSS Communications Industry Forecast. PQ Media’s proven research methodology and proprietary mapping system tracks, analyzes and forecasts spending, usage and trends in all 19 major segments and more than 100 sub-segments of the media industry. PQ Media provides industry stakeholders with actionable strategic intelligence to make high-stakes investment decisions. The firm’s custom and syndicated data and analytics are delivered to top executives through online and print reports, presentations and on-demand phone consultations.
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