NEW YORK: US consumers' voracity for media consumption is set to pass a milestone in 2008 as Joe and Josie Public's spend on media in all its forms overtakes that of advertisers.
"You could call [this year] a tipping point," says James Rutherfurd, managing director of media-centric private equity firm Veronis Suhler Stevenson.
By 2012 the average American will spend $1,078 per head on media, up 26.6% from last year, according to the forecast. Circa 41% of that figure will go to cable/satellite TV providers, up from 39% in 2007.
The firm's annual Communications Industry Forecast – awaited with almost as much eager anticipation as the Brangelina twins – is likely to create happy grins among the video game, cable and satellite TV, and ISP fraternities.
Aggregated spend by consumers and advertisers accounts for around half of the $876.3 billion (€562.85bn; £446.96bn) that went last year to the media and communications sectors excluding phone connections.
That total, which includes spending by marketers and institutions on business-to-business media, will rise to $1.18 trillion in 2012.
Comments Rutherfurd: "This is a bigger, more complicated and diverse set of businesses than most people think."
VSS' prognostications by sector are:
- Newspapers. Spending on dailies, weeklies and their digital ventures will fall 2.4% a year to $55.3bn in 2012, the firm says. Digital will account for 14% of the total, versus 5% last year. The biggest problem will continue to be classified ads moving to websites such as Craigslist. Newspaper classifieds will plummet an average of 11.3% a year through 2012 to $7.5bn vs. declines of 2.3% anually from 2002 to 2007.
- TV. Although growth in ad sales will slow for broadcasters, online ads and payments from cable and satellite providers will lift revenue 3.8% a year to $58.8bn in 2012. Cable and satellite will rise 7.3% a year to $188.9bn.
- Music. Digital downloads will outsell CDs in 2010, leading the beleaguered industry to an average increase of 0.9% a year, to $12bn in 2012.
Internet. Advertising will boast a nearly 19% compound annual growth rate from 2007-12, compared with just over 2.5% growth for broadcast TV and a 2.8% decline for newspapers. Three years from now, the internet will take over as the leading generator of advertising revenue.
- Overall. The advertising industry is expected to increase about 2.5% this year in the U.S. to $218bn, and its compound annual growth rate from 2007-12 will be percent.
All in all, it's likely the VSS report will hinder efforts by ad-reliant broadcast TV and radio stations, consumer magazines, and especially newspapers to portray their current problems as no more than a hiccup in an torpid economy.
Data sourced from multiple origins; additional content by WARC staff