Blog Post

Internet Ad Spend To Pass Broadcast By 2011, Despite Slowing Economy: VSS

The economy remains in the doldrums and by all accounts online ad growth continues to slow. But total communications spending is projected to rise 5.4 percent to $923.91 billion in 2008, thanks to strong gains in the institutional and alternative media sectors offsetting the declining traditional ad industry, according Veronis Suhler Stevenson and PQ Media.

Alt offsets traditional: In particular, spending on “alternative media” (includes word-of-mouth marketing, pure-play internet & mobile services, branded entertainment, out-of-home media, among others) will climb 21 percent to $81.67 billion in 2008. Alt media will account for 17.7 percent of total ad and marketing spend, up from 6.9 percent in 2002. By comparison, traditional advertising and marketing will be essentially flat, growing only 0.4 percent in 2008 to $378.48 billion. That number includes a 1.8 percent decline in traditional ad revenues, despite the flood of political and Olympics advertising, which will not balance out the drop-off in revs at newspapers, consumer magazines and broadcast radio. If it looks like VSS is more sanguine than the more pessimistic forecasts over the past few weeks, it’s mainly due to the broadness of the “alternative” category it measures.

Alt’s first slowdown: As a result of the range of segments in alternative, VSS expects the category to weather its first major downtown pretty well this year. Looking ahead, as the economy picks up, the segments within that category will see healthy increases. Alternative media will continue to spur growth in advertising and marketing through 2012, posting a 17.6 compound annual growth rate. As a result of the shift to alternative, VSS projects that newspapers will be particularly weakened, as broadcast TV will become the largest ad medium by year-end 2008 — the first time in U.S. history that newspapers have not held that position. Release