Web Leads Way in Media Spending

The media merchant bank, Veronis Suhler, in its 14th annual Communications Industry Forecast succinctly states that the American appetite for media and information just keeps growing and growing.

The report notes, in fact, that the average daily consumption of media will grow from 9.3 hours in 1999 to 10.4 in 2004. By 2004, Americans will spend more hours playing video games (161) and using the internet (228) than they spend reading daily newspapers (147), books (92), and magazines (77).

According to the report, total media industry spending grew 8.1% to $524.7 billion in 1999 and is forecast to rise at a compound annual growth rate (CAGR) of 7.8% throughout the forecast period 1999-2004, reaching $745.8 billion in 2004. That's compared with only 4.7% growth in nominal gross domestic product for the same period.

Advertiser spending will be driven in large part by the internet. Internet advertising, in Veronis Suhler's estimate, shot up 140.6% to $4.6 billion in 1999 and is forecast to increase at a 39.5% CAGR, more than quadrupling to $24.4 billion by 2004.

Here are the year-by-year spending levels:

In 2004, online ad spending will have jumped ahead of cable and satellite TV ($21 billion), network TV ($19.4 billion) and consumer magazines ($16.4 billion) and be nearly on par with radio ($26.6 billion). Online ad spending is expected to account for nearly a quarter of total advertising growth forecast for all segments through 2004. Furthermore, internet companies' heavy advertising in traditional media adds another dimension to the Internet's impact on total advertiser spending.