NEW YORK, NY – On August 10, 2010, private equity firm, Veronis Suhler Stevenson (VSS), announced the release of its Communications Industry Forecast for 2010-2014. The forecast predicts overall growth in the communications industry for the next five years.
The forecast provides a five-year forecast of spending for 2010 – 2014 plus a five-year historical record from 2005 – 2009.
The report is available for purchase, but VSS has provided an article which includes a summary of some of the key points in the report on their website.
Visitors to the VSS website can view the article at http://www.vss.com/news/index.asp?d_News_ID=190. The article includes a few charts and a PowerPoint presentation which is helpful and describes how the forecast breaks down by industry sector.
The State of the Economy and Drivers of Growth
The article goes on to describe what is happening in the economy and the drivers of growth. What is driving economic growth is a shift to digital alternative media and a continuing trend towards a new mass media model away from the old long-standing model of “one to many.” The new model “leverages the ability to target the individual and multiple niche audiences” plus it “empowers the individual and niche audiences to select between sources of content.”
Growth in the Communications Industry
They have prepared a chart that compares the last five years with a forecast for the upcoming five years.
The period between 2005 – 2009 showed overall sinking growth with a small upward bump in 2006 and an overall Compound Annual Growth rate (CAGR) of 3.4%. The forecast period for 2010 – 2014 shows a steady increase in overall growth with a CAGR of 5.8%.
Revenue Stream Sectors
The four revenue stream sectors in the report are represented by Advertising, Institutional End-User, Marketing Services and Consumer End-Users. Spending for 2009 ended with a total of 44.2% for Institutional End-User, with Consumer End-User coming in second at 20.6%, Marketing Services coming in third with 18.0% and Advertising coming in last with 17.1%.
Spending by Revenue Sector For 2009
- Advertising – 17.1%
- Institutional End-User – 44.2%
- Marketing Services – 18.0%
- Consumer End-User – 20.6%
The forecast predicts that Institutional End-User Spending will remain as the largest and fastest growing sector with results shifting a little bit. For the year 2014 it predicts Institutional End-User will be 46.1%, with Consumer End-User coming in second again at 20.6%, but with Advertising coming in third with 16.8% and Marketing Services coming in last with 16.3%.
Spending by Revenue Sector For 2014
- Advertising – 16.8%
- Institutional End-User – 46.1%
- Marketing Services – 16.3%
- Consumer End-User – 20.6%
Industry Sectors Represented
The report analyzes forecast growth by industry sector. Growth by sector is represented in the report by the following industry sectors:
- Business & Professional Information & Services
- Targeted Media
- Marketing Media
- Education & Training Media & Services
- Entertainment & Leisure
- Traditional Consumer Advertising Media
The report classifies Direct Mail and Direct Marketing in the “Targeted Media” sector.
Although the overall outlook for growth is expected to be optimistic for the next five years, there are, nevertheless, a few segments within industry sectors in which growth is predicted to be slow. For example low-single digit growth is projected for Direct Marketing and Business-to-Business Media.
Still, of the six industry sectors analyzed, the second-fastest-growing industry is predicted to be targeted media. Between 2009 to 2014 Targeted Media is forecasted to have a CAGR of 6.1% while direct marketing and business-to-business media is expected to have a CAGR of 3.1% (about half as much).