Given the recent turmoil in global economic conditions, Veronis Suhler Stevenson (VSS) published its latest Communication Industry forecast a bit later than usual. The investment firm’s forecast covers 6 sectors in the communications industry and considers 4 revenue streams. Overall, the industry will grow 4.1% this year, reaching $1.120 trillion, and while advertising and marketing services will struggle in 2011, the longer term outlook is positive.
The way VSS sees it, the communications industry is comprised of the following sectors:
- Targeted Media
- Business & Professional Information & Services
- Education & Training Media & Services
- Entertainment & Leisure Media
- Traditional Consumer Advertising Media
- Traditional Marketing
VSS analysts also break down the communications industry into 4 revenue streams which are predicted to reach the following levels in 2015:
- Advertising: $245.29 (billion)
- Marketing Services: $228.95
- Institutional End-User: $507.33
- Consumer End-User: $286.94
The predicted 7.9% compound annual growth rate for the Targeted Media sector is particularly noteworthy. Overall, this group will be worth $272.5 billion in 2015. The pure-play consumer Internet/Mobile services division is part of this group and will have the strongest growth of all categories, coming in at 16.2%. Branded entertainment, another division in the sector, will continue to grow as marketers spend more on event marketing, paid product placement and emerging categories such as video games. Marketers will also outsource the chore of custom content development and forecasters expect that category to grow from $3.74 billion this year to $4.52 billion in 2015.
The advertising revenue stream, currently at $188.16 billion, is expected to achieve compound annual growth of 6.0% through 2015 and reach $245.29 million. Analysts believe TV will hold the top position in the stream, but “pure-play mobile advertising spending will be the fastest growing.” Technology platforms and services will allow agencies and marketers to easily work with mobile ad networks and help to fuel this growth. Despite the growing consumer interest in all things digital, VSS analysts say that some traditional media formats will grow through 2015: Broadcast TV, consumer magazines, and broadcast and satellite radio.
The move to digital appears inevitable, however. The average U.S. consumer spent 397 hours online last year and 77 of these hours were devoted to social media. And this year, wireless media technology will result in 104 hours per person spent on wireless media.[Source: New VSS Forecast 2011–2015. Vss.com. 28 Sept. 2011. Web. 10 Oct. 2011]