Growth in Media Spend to Hit 30-Year Low: VSS

Posted on by Chief Marketer Staff

The overall media spend this year is expected to slip to its lowest growth rate, only the second decline in 30 years.

The decline is projected to be 0.4%, following an increase last year of 2.3%. This compares to previously projected growth of 5.4% and 4.9% for 2008 and 2009 respectively, according to Veronis Suhler Stevenson.

“The continued negative outlook for economic activity, coupled with secular shifts and cyclical trends underway in the media and communications industry, are expected to limit the sector’s overall growth in 2009,” the firm said.

Newspaper publishing leads the trend, estimated to contract by 16.2% in 2009 (vs. -13.5% in 2008), followed by broadcast television projected to decline by 9% in 2009 (vs. -0.5% in 2008). Consumer magazine publishing is expected to decrease by 8.5 % (vs. -6.8% in 2008), closely followed by broadcast and satellite radio projected to drop by 7.2% this year (vs. -5.8% in 2008).

Other findings include:

*Marketing services, including segments such as direct marketing, promotions and branded entertainment, will decline 1.3% dropping to the second largest communications sector in 2009.

*Advertising spending will drop 7.4% in 2009, the first two-year decline in 75 years as it also declined in 2008. Steep reductions in traditional advertising spend such as newspapers, television, and consumer magazines are being driven by fragmentation of target consumers and brand strategies which are increasingly focused across multiple venues and platforms.

Segments expected to drive growth are those consumers rely on to seek information for business or learning, or digital access, content and entertainment, VSS found.

*The pure-play internet and mobile services segment is still growing albeit the growth rate is slowing considerably. Previously expected to grow by 15.5% in 2009, VSS now projects an increase of only 9.1% for 2009, down from 11.6% in 2008.

*Mobile content and videogames will continue to be in demand and record double-digit growth (34.2% and 19.5%, respectively), however at significantly lower percentages than originally predicted.

*While reflecting a downward growth revision of several percentage points, the institutional end-user sector−in particular the professional and business information segment−will remain the fastest growing of the four communications sectors in 2009 with a 2009 growth rate of 5.1%. It will emerge as the largest sector for the first time since VSS began tracking communications spending.

*Various alternative communications segments included in both consumer and institutional end-user sectors−such as branded entertainment, digital out-of-home, and professional business information services−are also growing faster than other communications segments as well as the broader economy.

The 2009 VSS Mid-Term Forecast available to subscribers of VSS MediaResearchNet 2.0, includes a wealth of data for all four core media and communications sectors and 20 media segments, breaks down performance data by percentages and dollar spend, and shows relevant variances for projected growth and decline in 2008/2009.

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