Report: $6.5 Billion in Online Ad Spending in 2002
By Beth Cox
[October 23, 1998] Veronis, Suhler & Associates released the 12th annual
Communications Industry Forecast, which predicts that advertising
spending growth will be paced by a ramp-up in online advertising, from
$906 million in 1997 to $6.5 billion in 2002.
The forecast does not expect that 1997's robust growth in communications
spending can be maintained, but does not anticipate a recession. Based
on the fundamental health of the U.S. economy, reflected in near-full
employment and historically high income levels, Veronis, Suhler expects
Americans to maintain their strong appetite for media and entertainment.
Consumer spending growth particularly is seen as particularly strong for
cable television subscriptions, other subscription video services and
online services.
Over the five-year forecast period from 1997-2002, VS&A projects overall
spending on media to rise at a compound annual growth rate (CAGR) of 7.7
percent, reaching $613.7 billion by 2002. Compound annual growth in the
high single digits is forecast for spending by advertisers, institutions
and consumers alike.
Currently the seventh largest industry in the U.S., communications is
forecast to be the second-fastest-growing industry behind
telecommunications from 1997-2002 and will move up to sixth place in
size by period's end, increasing its share of GDP from 4.8 percent in
1992 to 5.9 percent by 2002.
Advertisers are far from abandoning traditional consumer and business
media, however. In the five-year period 1992-1997, advertiser spending
rose at a CAGR of 6.1 percent for broadcast television, 9.3 percent for
radio, 6.2 percent for daily newspapers, 7.0 percent for consumer
magazines, 8.0 percent for business magazines, and 7.6 percent for
outdoor advertising.
A healthy economy is forecast to maintain these growth rates. From
1997-2002, advertising spending is forecast to reach a CAGR of 6.1
percent for broadcast television, 9.3 percent for radio, 7.2 percent for
daily newspapers, 6.25 for consumer magazines, 9.2 percent for business
magazines, and 8.4 percent for outdoor advertising.
The very fragmentation of the advertising market appears to boost
spending, the report said. Expanding advertising options have enhanced
advertisers' ability to reach their target audiences, leading to
increased spending in all ad forums.
While usage grows slowly, remains flat or shrinks for traditional media
such as broadcast TV, radio, consumer magazines and newspapers, these
media remain the best alternatives to reach a broad audience. The cable
audience is itself fragmenting among proliferating players, leaving
broadcast networks as yet unchallenged as a source for reaching a mass
audience.
Veronis, Suhler & Associates, a media industry investment bank,
publishes three annual research reports: the Communications Industry
Forecast, tracking consumer media consumption and spending trends over a
10-year period (1992-2002 in 1998); the Communications Industry
Transactions Report, analyzing publicly reporting company mergers,
acquisitions and other transactions in each media segment over a
five-year period; and the Communications Industry Report, tracking the
financial yearly performance of all publicly reporting media companies
by media segment over a five-year period. A full copy of the
Communications Industry Forecast is available from Veronis, Suhler &
Associates for $1,495.
Last modified: Friday, 23-Oct-1998 08:48:00 EDT
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