VSS Forecast Sees Slow Growth Ahead For Radio
August 11, 2010 at 6:06 AM (PT)
VERONIS SUHLER STEVENSON (VSS), has released its "VSS COMMUNICATIONS Industry Forecast 2004-2014," providing a five-year historical record and a five-year forecast of spending for four Revenue Streams -- and now also an additional analysis of the six major Industry Sectors -- including 20 segments and more than 100 sub-segments of the U.S. Communications Industry.
VSS predicts total Communications Industry spending is on pace to increase 3.5% in 2010 and post a compound annual growth rate of 6.1% in the 2009-2014 period to $1.416 trillion, driven by a gradual economic recovery, advances in digital technology, and secular trends impacting the entire industry landscape.
"There will be a longer and slower economic recovery during the expansion period covered by the forecast compared with previous expansions because of the breadth and depth of the recession," said VSS Co-Founder, Pres./General Partner JOHN SUHLER. "We expect the Communications Industry will only slightly outperform nominal GDP over the next five years. Advertising and marketing investments, historically the drivers of Communications growth during recoveries, are expected to be more muted due to the shift away from traditional media outlets to more targeted media."
The VSS Forecast has been published annually since 1986, with information dating back to 1975. This year’s VSS Forecast offers three unique perspectives of the entire Communications Industry that work in parallel to identify patterns, help to fully illuminate trends, and offer direct comparisons.
Continued Shift To Digital Alternative Media And Drivers Of Growth
VSS found the long-standing mass media model of one-to-many is being challenged by the growing influence of a new model that leverages the ability to target the individual and multiple niche audiences, as well as empowers the individual and niche audiences to select between sources of content.
The report wrote that "Overall, media usage will remain relatively flat during the 2010-2014 forecast period as consumer and business end-users continue to migrate to digital platforms that have more searchable and often shorter and more focused content when compared with traditional media.
"This shift to alternative digital media will also be influenced by consumers and business end users taking more command over what information and entertainment they want to consume through wireless devices, such as computer tablets, eBooks, and third- and fourth-generation mobile phones."
Future Growth By Industry Sector
"Gains during the forecast period 2010-2014 are expected to be driven by continued growth of Business & Professional Information & Services, Entertainment & Leisure Media, and Education & Training Media & Services, and will significantly contribute to total communications spending reaching $1.416 trillion by 2014, a 6.1% increase CAGR, or the year-over-year growth rate," found VSS.
"Business & Professional Information & Services will be the fastest-growing industry sector from 2009 to 2014, posting an 8.2% CAGR between 2009 and 2014 to reach $249.00 billion, as Business & Professional Information and Business & Professional Services operators expand their online and mobile products and services.
"The Entertainment & Leisure Media sector is forecast to post CAGR gains of 6.3% over the next five years, reaching $353.87 billion, with 6.3% CAGR growth.
"For Traditional Consumer Advertising Media, which includes Broadcast TV, Newspapers, Consumer Magazines, Broadcast & Satellite Radio, Yellow Pages Directories, and Out-of-Home Media, growth in the 2009-2014 period is expected to be sluggish at around 2.2% CAGR, totaling $159.30 billion. The availability of new media platforms and technologies will contribute to continued changes in consumers’ media use, particularly secular declines in consumer consumption of traditional media platforms. This will prompt brands and agencies to re-evaluate their traditional advertising strategies and tactics."
Future Growth By Revenue Stream
From a Revenue Stream perspective, overall Communications Industry growth during the forecast period 2009-2014 will be fueled by solid gains in Consumer and Institutional End-User spending, which combined will climb at a 6.9% CAGR to reach $953.54 billion in 2014, forecast VSS.
"The Advertising Revenue Stream is expected to benefit from two additional even-year spending boosts -- the Olympics and political campaigns -- in the 2010-2014 period. This will drive a 5.4% increase in CAGR, pushing spending on Advertising in the forecast period to $234.90 billion in 2014.
"Advertising was the other Revenue Stream to decline in 2009. Without the even-year spending boosts to help the bottom line, spending was $180.25 billion, a 14.1 percent drop from 2008 and a 1.1 percent decline in CAGR between 2004 and 2009. Traditional Advertising media, including print media such as newspapers and magazines, will rebound during the forecast period as the economy improves and advertising budgets are restored. However, traditional Advertising media will continue to struggle because competition from alternative advertising vehicles."