Communications Spend to Reach $1 Trillion in '08;

Internet to Surpass All Ad Segments in 2011

Total communications spending increased 6.8 percent to a record $885.2 billion in 2006, having expanded at a compound annual growth rate (CAGR) of 5.9 percent from 2001 to 2006 (and exceeding GDP growth in both periods), according to exclusive data released today by Veronis Suhler Stevenson (VSS), MarketingCharts reports.

Communications spending growth accelerated in 2006, outpacing nominal GDP for the fourth time in five years, while consumer media usage declined following two consecutive years of decelerating growth, according to the VSS Communications Industry Forecast 2007-2011.

The VSS forecast tracks, analyzes and forecasts spending, usage and trends in all 19 segments and more than 100 sub-segments of the US media industry, including alternative advertising and marketing data licensed exclusively from PQ Media.

According to the VSS data and forecast:

• The communications industry is on pace to grow 6.4 percent in 2007 and post a CAGR of 6.7 percent in the 2006-2011 period, making it the third-fastest-growing sector of the US economy.
• Communications spending will top $1 trillion for the first time in 2008, with growth driven by strong gains in the alternative media and institutional end-user sectors.
• Total communications spending is forecast reach $1.222 trillion in 2011.
• In what would be a watershed moment in communications history, internet advertising - including pure-play websites and digital extensions of traditional media - will replace newspapers as the largest ad medium in 2011.
• For the first time since 1997, consumers spent less time with media in 2006 than they did the previous year: Media usage per person declined 0.5 percent to 3,530 hours, due to changing consumer behaviors and digital media efficiencies.
• Consumers are also migrating away from advertising-supported media, such as broadcast TV and newspapers, to consumer-supported platforms, such as cable TV and videogames: Time spent with ad-supported media declined 6.3 percent from 2001 to 2006.
• However, media usage by institutional end-users grew 3.2 percent, to 260 hours per employee, in 2006, according to the first-ever analysis of business and government media usage included in this year's VSS Forecast.

MarketingCharts has more data from the VSS forecast.