Goodbye, Smudge: Online Clobbers Ink Ads by 2011, Report Says

Online advertising will be bigger than newspaper advertising in the United States by 2011, according to a new forecast by Veronis Suhler Stevenson, a private equity firm for the media, communications, information, and education industries.

In its annual media research report, VSS expects total Internet advertising to reach $61.98 billion in 2011, surpassing newspapers as the nation’s largest ad medium to include pure-play websites and digital extensions of traditional media. This is based on a projection that money going to online ads will grow by over 21% each year for the next four years.

In comparison, the report predicts newspaper advertising will be worth $60 billion.

Despite this shift, television, cable, and satellite will continue dominating all U.S. advertising budgets; the forecast for these markets is expected to reach $86 billion in 2011.

Alternative Advertising Segments

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VSS notes that spending on alternative advertising — including Internet, mobile, videogames, and digital out-of-home — grew 36.6% to $26.53 billion in 2006 whereas traditional advertising spending grew 2.4% to $183.21 billion in 2006. The largest drop in traditional media was in print-based newspapers, yellow pages, and consumer magazines.

Spending on alternative marketing — including branded entertainment, interactive marketing, and e-custom publishing – increased 17.3% to $61.67 billion in 2006 whereas spending on traditional marketing (i.e., direct mail, promotions) grew only 5% to $192.34 billion in 2006.

“We are in the midst of a major shift in the media landscape that is being fueled by changes in technology, end-user behaviors, and the response by brand marketers and communications companies,” said James Rutherfurd, VSS executive vice president, in a statement.

VSS projects the fastest-growing media segments over the next five years will be pure-play Internet and mobile services, branded entertainment, out-of-home media, outsourced custom publishing, and public relations.

Elaine Rigoli has nearly 15 years of experience managing content and community for various B2B and consumer websites. Elaine has written thousands of business and technology articles and has been quoted in The Wall Street Journal and eWeek, among other publications.

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