Media Surveys Shed New Light and Confirm Old Suspicions

Two major reports released recently offer both confirmation of declining advertising and marketing spend and a glimpse at the areas for growth in the coming years.

According to the VSS (Veronis Suhler Stevenson) "Communications Industry Forecast 2009-2013," "Total communications spending will decline 1% in 2009 to $882.6 billion, but will grow 3.6% per year over the next five years to over $1 trillion." James Rutherfurd, executive vice president and managing director of VSS, notes that this is, in part, because we will be climbing out of the recession, "but what's going on underneath that is that some of the smaller segments, like internet marketing, are making more of a difference to the overall pie."

In terms of segments, it's the usual suspects in decline: newspapers, consumer magazines, and Yellow Pages are among those segments shrinking, while internet media, ebooks, B2B emedia, video games, and mobile advertising and content are among the growth areas. VSS looks at spending, usage, and trends in advertising, marketing, consumer, and institutional sectors.

"One of the interesting things is that the video game market will exceed the home video business sometime in the next few years," says Rutherfurd. Looking back to 2003, the home video market was a $27 billion business and the video game market sat at slightly more than $8 billion, but by 2013, VSS expects home videos will decrease to $22 billion, with video games up to $31 billion. Rutherfurd predicts particular growth in the multiplayer online game space and the mobile game space, although the bulk of the market will remain console video games.

Both pure-play internet and mobile service companies and hybrid brands also stand to grow significantly by 2013. A $78 billion segment today, internet and mobile services will be a $130 billion industry by 2013 and account for 10% of overall communications spend, according to VSS.

On the B2B advertiser side, Outsell, Inc. recently released its "Advertising and Marketing Study 2009." The survey is usually conducted late in the year, but Outsell held off on the current survey until February 2009 because of the economy, in hopes that a delay would give a more accurate picture of how companies are actually spending money during the recession instead of reflecting predictions. The survey includes information from 1,019 U.S. advertisers and 204 U.K. advertisers.

According to Outsell's results, 40% of U.S. B2B advertisers that are considered large companies (1,000-plus employees) plan to decrease their spending this year, while only 26% of small companies (1-100 employees) do. "Large companies tend to have more recognizable brands, and they tend to get a momentum effect. They can reduce advertising and marketing spend more than the smaller companies [without impacting results]," explains Chuck Richard, vice president and lead analyst for Outsell.

The bulk of funds, by both small (59.1% of spend) and large companies (51.1% of spend), are spent on their own websites, which Richard says should be noteworthy to publishers looking to branch out, especially because Outsell does not expect that an economic recovery will also bring about a recovery in advertising through traditional means such as print. Companies with the resources to do so should consider building a consultancy business and pocketing some of the money on the table now.

"One of the leaders in this is the venerable Thomas Publishing. They basically went all online in 2006 and, along the way, they developed a parallel line of business for people who buy listings on ThomasNet. They will help them build their own website, online catalogs, track their analytics, SEO, and all of that other information," explains Richard.

Looking ahead, it's also likely that innovation on the part of advertisers will result in new ways to reach audiences. One year after Esquire magazine ran a digital cover, the Sept. 18 print issue of Entertainment Weekly included a video ad, created for CBS and Pepsi, and sent to subscribers in the Los Angeles and New York areas. The thin, interactive video player allowed readers to view preview segments or montages of CBS' Monday night line-up, as well as a humorous ad from Pepsi Max.

Describing the innovative marketing move, George Schweitzer, president of CBS Marketing Group, told Ad Age: "It was axiomatic: If you ran an ad in TV Guide, people would watch your program. Not anymore."