Veronis Suhler projects 7% bump in spending for 2006

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Total communications spending in the U.S. will reach $961.90 billion this year, up 7.2% from 2005, according to a report released last month by Veronis Suhler Stevenson.

The report, "Communications Industry Forecast 2006-2010," examines total spending on communications, including advertising, paid content and marketing services.

By 2010, total communications spending in the U.S. will reach $1.24 trillion, according to the report.

In what has become a hypercompetitive business environment, media companies continue to develop new products and services for their customers and advertisers, especially online products.

Despite the increased competition and media fragmentation, traditional media companies have best positioned themselves to capitalize on the surge in broadband spending.

Spending on Internet and mobile advertising, marketing and paid content through traditional media companies is expected to total $25.57 billion this year, up 26.1% over 2005. Traditional media companies will account for 45% of the total spending on Internet and mobile services by the end of the year, up from 16% in 2000, according to VSS.

"[Digital] spending is being driven by companies like TechTarget, IDG, Ziff, CMP and Penton, which have been doing a good job of developing their online business," said Tom Kemp, a managing director at VSS and former chairman-CEO of Penton Media. "A lot of [b-to-b media] companies are still just scratching the surface online."

Kemp added: "The b-to-b guys have been behind the curve on digital spending, but everyone realizes that their future success?and very survival?depends on adopting integrated online strategies."

B-to-b media spending is expected to increase 6.3% to $23.69 billion in 2006 and reach $30.17 billion in 2010. Print advertising, which generates the bulk of revenue for many b-to-b media companies, continues to suffer as marketers divert their ad dollars to online media that can provide more measurable ROI than print products.

Trade show spending is expected to grow at a compound annual rate of 5.8% from 2005 to 2010, when it is projected to reach $12.89 billion. The trade show industry struggled in the wake of the 9/11 terrorist attacks, but in the last few years has bounced back to provide b-to-b media companies with solid profit margins.

Spending on digital media climbed 27% to $1.87 billion in 2005. Kemp said one of the most pressing challenges for b-to-b media companies now is to find executives who can take their online presence to a more prosperous level. "The e-media talent pool is getting a bit shallow," he said. "It's not just recruiting IT people but people who understand how to communicate with customers and can change the DNA in the culture."

With the growing appetite for data, spending on professional and business information services is expected to increase 8.2% this year to $135.35 billion. Spending on such services is forecast to reach $181.90 billion by 2010.

Kemp said business information services present an attractive opportunity for b-to-b media companies because they play into the growing demand among decision-makers for hard data.

"The great thing about business information services is the money to pay for those services isn't coming out of the ad budget but the budget for strategic planning," he said. "That's a big difference."

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