VSS: Communications Industry to Grow 5.2% through 2016
Ad Projections
September 26, 2012 -- Spending within the U.S. Communications Industry to grow at a 5.2% CAGR to $1.455 trillion by 2016, almost two times the growth rate during the past five years, according to the 2012 Forecast by Veronis Suhler Stevenson (VSS), a well-respected global capital private investment firm. At that pace, the Communications Industry will remain the fifth-largest industry among 15 economic sectors in 2016.
The VSS Communications Industry Forecast 2012-16 reveals that U.S. Communications Industry spending grew 4.4% in 2011 despite a sluggish economy in which nominal Gross Domestic Product expanded 3.9%. Spending rose at a compound annual growth rate (CAGR) of 2.7% in the 2006-2011 forecast period, surpassing GDP by a 0.3 percentage point.
In 2012, spending within the U.S. Communications Industry will increase 5.2% reach $1.189 trillion as consumers and businesses increasingly embrace digital technology and return to spending levels not seen since before the recent worldwide economic downturn.
Industry growth Driven by Increases in Digital Spending
Last year, digital-related expenditures accounted for 25.1% of consumer and advertising spending and 34.6% of institutional spending, and VSS expects those percentages to increase to 39.3% and 48.9%, respectively, by the end of the forecast period.
Key Trends in 5 Year Forecast Period for Industry Sectors: All six sectors will post gains
VSS projects that all six Industry Sectors will post CAGR gains in the 2011-2016 period, with the biggest percentage increases coming in Targeted Media, and Business & Professional Information & Services, and the largest increase in spending coming from Targeted Media, which will increase from $200.38 billion in 2011 to $285.97 billion in 2016.
- Spending on Targeted Media will increase 7.7% to $215.81 billion in 2012, with overall gains led by strong growth in Branded Entertainment and Pure-Play Internet & Mobile Services. Outsourced Custom Publishing will strengthen, while Direct Marketing and B-to-B Media will post steady but modest gains. Targeted Media will experience a 7.4% CAGR in the forecast period, reaching $285.97 billion in 2016, and fueled by Branded Entertainment and Pure-Play Internet & Mobile Services.
- Traditional Marketing spending will grow 4.2% in 2012 to $75.91 billion, buoyed by political campaign spending in certain segments and subsegments, including Public Relations & Word-of-Mouth Marketing, and Promotional Products. Three even-year political campaigns, strong growth in Public Relations & Word-of-Mouth Marketing, and a turnaround in B-to-B Promotions will contribute to a 4.2% CAGR in the forecast period, reaching $89.34 billion in 2016.
- In the Business & Professional Information & Services sector, spending will rise 7.2% to $204.43 billion in 2012 and post a 7% CAGR in the forecast period, fueled by solid growth in both Business & Professional Information and Business & Professional Services, particularly those relating to marketing, financial & economic and scientific & technical Information, as well as technology services, such as wireless data access, Software as a Service (SaaS) and cloud computing.
- Education & Training Media & Services will increase 4.4% to $252.46 billion in 2012 and post a 4.2% CAGR in the forecast period. Solid gains in College Media and Outsourced Corporate Training will offset more modest growth in K-12 and declines in For-Profit Postsecondary Educational Services.
- Spending on Entertainment & Leisure Media will increase 4.9% to $293.49 billion in 2012, with strong gains in Subscription TV spending expected to offset weaker growth in Entertainment Media and declines in Consumer Books. Steady growth in Subscription TV spending and a resurgent Entertainment Media will produce a 4.9% CAGR in the forecast period despite protracted declines in Consumer Book spending.
- Traditional Consumer Advertising spending will post a 2.0% gain in 2012 to $146.57 billion. Even-year political and Olympics spending on Broadcast Television and accelerated growth in Broadcast & Satellite Radio and Out-of-Home Media will drive the gain. Broadcast TV, Broadcast & Satellite Radio, and Out-of-Home Media will also drive a 2.1% CAGR in the forecast period. Newspapers, Magazines and Local Consumer Directories will continue to struggle during the forecast period.
Source: VSS, New VSS Forecast 2012-2016: U.S. Communications Industry Spending Increased 4.4% to $1.129 Trillion in 2011; Expected to Rise 5.2% in 2012 to Reach $1.189 Trillion, September 26, 2012.
