Thursday, August 09, 2007

Internet Ad Spending Set To Overtake All Other Media By 2011:

Internet Ad Spending Set To Overtake All Other Media By 2011: VSS
by Laurie Petersen

SPENDING ON INTERNET ADVERTISING WILL reach $61.98 billion, and will surpass newspapers to become the nation's leading ad medium in 2011, projects private equity firm Veronis Suhler Stevenson in its 21st Communications Industry Forecast released today.
"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," says James Rutherford, executive vice president and managing director at VSS.

At the same time, the consumer migration to digital media--which require less time investment than traditional media counterparts (think 3-minute YouTube clips versus 30-minute TV shows)--has spawned a year-over-year decline in the amount of time consumers spent with media, VSS researchers say. The tally came in at 3,530 hours in 2006, a per-capita decrease of 0.5%. It's the first time since 1997, researchers say, that such a behavior has occurred.

Consumers are also migrating away from ad-supported media and spending more time with media they support, according to the VSS Forecast. Consumers spent an average of 1,631 hours in 2006 with consumer-supported media, such as the Internet and video games--a gain of 19.8% compared to 2001. Time spent with ad-supported media, such as broadcast television and newspapers, has fallen 6.3% since 2001 to 1,899 hours per person.

"We expect these shifts to continue over the next five years," Rutherford adds," 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."

Total communications spending for 2006 increased 6.8% to a record $885.2 billion and the compound annual growth rate (CAGR) of 5.9% from 2001 to 2006 outpaced the nominal GDP, the VSS Forecast reports.

According to the VSS Forecast, which was prepared in part using proprietary data from PQ Media's Alternate Media Outlook:

Ad spending on pure-play Internet sites reached $15.1 billion for 2006, and is projected to hit $34.78 billion in 2011, for a CAGR of 18.2%.
Growth of 25.79% is projected for ad spending on traditional media-based Internet sites, which hit $8.585 billion in 2006, and is projected to reach $27.2 billion in 2011.
National Internet advertising, which includes search, display, sponsorships, etc., is projected to remain the dominant dollar-generator with $38.897 billion forecast for 2011, representing an 18.2% CAGR from 2006-2011.
Blog, podcast and RSS advertising is projected to reach $1.138 billion by 2011, registering the fastest growth rate at a 70.9% CAGR forecast from 2006-2011.

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