VSS: Radio Remains ‘Extremely Dependent’ on Stressed Economic Sectors - Radio World

VSS: Radio Remains ‘Extremely Dependent’ on Stressed Economic Sectors

Branded entertainment and alternative media spending up, report says
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Private equity firm Veronis Suhler Stevenson says traditional media should get used to less revenue as 2008 and 2009 witnessed a major shift in the spending patterns in the communications industry as advertising for traditional media declines and non-traditional media grows. The results are part of the VSS 23rd Communications Industry Forecast out this week, covering the years 2003-2013.

While consumer media usage remains generally flat over the past year, the way in which consumers are spending their time continues to evolve, according to VSS. “No longer are newspaper and magazine subscription purchases and network prime-time viewing the norm. Instead, they are declining and consumers are spending more time with media which they support and pay for as opposed to ad-supported media,” said John Suhler, co-founder, president and general partner of VSS.

Changing consumer behaviors have led to declining print advertising spend, particularly in newspapers where spending fell 13.1% to $54.16 billion in 2008, and consumer magazine publishing showed a spending drop of 5.8% to $22.91 billion. These sectors also suffered from budget cuts by local and national advertisers in key categories such as auto and financial services.

Broadcast and satellite radio were not able to avoid the industry decline in advertising spend. Local station advertising, which VSS says is “extremely dependent” upon stressed economic sectors like auto and home, saw their spend fall 7.1% to $20.28 billion in 2008. Consumers are migrating away from traditional radio to online social networks featuring up and coming artists. In addition, the depressed auto industry is hindering satellite radio growth, as fewer new cars are being sold with satellite radio services, according to the private equity firm.

Spending on branded entertainment soared 12% to $24.97 billion in 2008 as brands pursued marketing strategies that engage and connect with target audiences who are increasingly skipping ads and migrating away from traditional media. As more brands incorporate venue-based media into their mix, overall spending on branded entertainment is expected to grow at 9.3% during the forecast period, reaching $38.88 billion in 2013.

Spending on alternative media as a whole is projected to reach $139.45 billion in 2013, representing 29.7% share of total advertising and marketing spending, up from just 18.2% in 2008.

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