Study: Broadcast beats papers for ad sales

VSS data says Internet will lead in three years

This year will mark the first time in U.S. history that broadcast television will get more advertising dollars than newspapers, according to a study due Tuesday.

If the prognostication from Veronis Suhler Stevenson is correct, broadcast TV will be the No. 1 advertising medium in the country, knocking newspapers from the spot they have held since the late 18th century, the start of such record-keeping.

However, the TV networks ought not get too complacent -- three years from now, Internet advertising will take over as the leading generator of advertising revenue, VSS says.

According to VSS, a media private equity firm, Internet advertising will boast an 18.9% compound annual growth rate from 2007-12, compared with 2.6% for broadcast TV and negative 2.8% for newspapers.

Last year, newspapers took in $51.5 billion in advertising revenue compared with $48 billion for broadcast TV. But this year, with a boost from a presidential race and the Olympics, broadcast TV will spike to $51 billion while newspapers sink to $46.8 billion.

And once newspapers relinquish their lead, they aren't expected to regain it any time soon.

Meanwhile, broadcast TV should sink in 2009 after the political and Olympic surge, then resume growth, but it won't be quick enough to maintain its lead over the Internet for much longer.

In 2011, the top 3 U.S. advertising media should break down like this: $59.8 billion for the Internet, $51.2 billion for broadcast TV and $43.7 billion for newspapers.

Of course, it's not all gloom for TV, newspapers and other Internet competitors because they have their own online strategies.

That's why VSS breaks down the Internet into two categories: "pure play," like Yahoo and Google, and "traditional," like ABC.com and NewYorkTimes.com. Only when the two are added together will they claim the top spot by 2011.

This year, pure-play Internet will claim $21.9 billion in advertising revenue, 20.6% more than a year earlier.

Traditional Internet, while smaller, is growing faster than pure play, according to VSS. Traditional this year should claim $14.1 billion in U.S. advertising revenue, 28.3% more than a year earlier.

"They were further behind, but they got their acts together," VSS managing director Jim Rutherfurd said. "They have strong brands that are revenue-generating machines."

Overall, the advertising industry is expected to increase 2.4% this year in the U.S. to $217.6 billion, and its compound annual growth rate from 2007-12 will be 4.3%.
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