Advertising and promotional spending will increase at a projected 6.2 percent compound annual rate over the next five years, reaching an estimated $411 billion by 2001, according to a new communications industry forecast by New York investment banking firm Veronis, Suhler & Associates.
The report tracks and predicts advertiser and consumer spending annually across 12 communications industry categories.
The projected growth is stronger than the 5.1 percent annual rate of the previous five years, the study states.
At the same time, consumers are shifting significant portions of their money and time toward newer categories such as online subscriptions and pay-per-view movies, according to the study. Consumer spending for online services, for example, is projected to grow at a compound annual rate of 19.8 percent over the next five years.
Similarly, consumer expenditures for both the home video and TV subscription markets, fueled by the popularity of pay-per-view movies, are expected to expand by 8 percent and 7 percent, respectively.
"Consumers are moving toward those media that offer a high degree of control," said John Suhler, president of VS&A.
The report predicts this increased audience fragmentation will stimulate advertisement spending by clients in these emerging media without adversely affecting traditional media ad expenditures.
In fact, advertisers are expected to increase their ad spending in traditional media. Although consumers will spend less time with such media as television, radio, newspapers and magazines, traditional channels will still command 83 percent of total consumer time in 2001.
Broadcast television is expected to show an annual compound growth rate in advertising dollars of 5 percent, with radio increasing 9.1 percent. Daily newspapers and consumer magazines are predicted to grow at 7.1 percent and 7.9 percent, respectively.