Veronis Suhler Stevenson Revises Forecast Downward

Two Years of Ad-Spending Declines Not Seen in 75 Years

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NEW YORK ( -- The roiling economy is reversing the fortunes of traditional media across the spectrum and has caused a leading forecaster to revise its initial outlook. A new report from private-equity firm Veronis Suhler Stevenson projects that overall spending on media will fall 0.4% in 2009, after an increase in 2008 of 2.3%. The company has revised its previous forecast, released in August, that called for 4.9% spending growth in 2009 and 5.4% growth in 2008.

Veronis said the rates mark the media industry's lowest -- and only the second time rates have declined -- since it began collecting data 30 years ago.

Generally speaking, Veronis said the segments set to experience the most decline are "traditional media segments that have seen an increase in competitive alternatives which offer stronger proof-of-performance."

According to the firm's forecast, newspaper publishing will be the hardest hit, with overall spending contracting by 16.2% in 2009, compared with a decline of 13.5% in 2008.

Spending on broadcast TV is set to fall by 9% in 2009, compared with a decline of 0.5% in 2008. Spending on consumer magazines is set to decline by 8.5%, compared with a slide of 6.8% in 2008, while spending on broadcast and satellite radio is set to fall by 7.2%, compared with a drop of 5.8% in 2008.

Economy speeding up shifts
Many traditional media venues have fought for ad dollars in recent years, as emerging media with more precise measures of consumer involvement gain a foothold in consumers' ever-evolving behavior. Now the sputtering economy is accelerating some of those shifts, Veronis executive Jim Rutherfurd said in a brief interview.

"Steep reductions in traditional advertising spend such as newspapers, TV and consumer magazines are being driven by fragmentation of target consumers and brand strategies which are increasingly focused across multiple venues and platforms," Veronis said in its forecast.

Indeed, traditional advertising spending is predicted to fall 7.4% in 2009, marking the first two-year decline in 75 years, the firm said. But Veronis forecasts that marketing services, a segment that includes direct marketing, promotions and branded entertainment, will see overall spending decline by 1.3%.

Not all is doom and gloom. Some emerging segments are primed to show growth, the firm predicted. Spending on internet and mobile services is expected to grow 9.1% in 2009, down from 11.6% in 2008. Mobile-content spend is forecasted to grow 34.2% in 2009, up from 19.5% in 2008. Spending on professional and business information is expected to grow 5.1% in 2009, and will become the largest sector for the first time since Veronis started tracking communications spending.

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