Saturday, September 03, 2005


ADVERTISING: Research sees 'fundamental shift' from print to web

August 14, 2005 11:40 PM

SOURCE: The Financial Times via MSN Money

Veronis Suhler Stevenson, the private equity firm, said in a new survey that the pervasiveness of the internet was pushing fundamental changes as advertising money shifts online and as consumer attention drifts from traditional media.

The report predicts that new media advertising which includes cable and satellite television, internet and video game advertising will grow by nearly 17 per cent every year for the next five years, reaching $69bn by 2009.

Recent investing newsS. Korea, Taiwan, Hong Kong Markets Hailed Hu aims to defuse rising tension with US Bush pledges thousands more troops after hurricane /C O R R E C T I O N -- The Coca-Cola Company/ Microsoft, Google Trade Salvos Over ExecBy then, spending ondigital-based media will push average annual consumer spending on media in the US over the $1,000 level for the first time.

"The industry is undergoing a fundamental change, as predicted by internet pundits a decade ago," said James Rutherfurd, executive vice-president of Veronis Suhler Stevenson (VSS).

Traditional media companies have already stepped up their acquisitions in the internet space. News Corp said last week it would spend up to $2bn investing in the space, and others such as the New York Times' parent and Dow Jones have made purchases.

Mr Rutherfurd said the difference between now and five years ago, when media companies also rushed to make internet investments, most of which were written off, was that there was confidence that the internet offered solid opportunities.

"I don't sense the fear that was there before, although there is still confusion as to how best to take advantage of these changes," Mr Rutherfurd said.

The bust which followed the internet bubble resulted in a severe decrease in advertising in 2000 and 2001 and a recession in the media and communication industries. Last year, the sector grew strongly for the first time since then, up 7.3 per cent. The VSS report estimates growth of 6.8 percent this year to $858bn.

The internet is proving to be one of the most effective because advertisers can measure audience response by monitoring the number of people who click on links.

This, combined with consumer complaints about ad clutter, have resulted in a shift from advertising-based media, such as broadcast television, radio, newspapers and magazines. Five years ago, these media accounted for 64 per cent of consumer time spent with media. In five year's time, VSS predicts these will account for 54 per cent of consumer time spent, with subscription- and fee-based media accounting for 46 per cent.

Copyright 2005 Financial Times


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