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Slow growth for TV ads

But online commercials will rise at a 40% annual clip, the latest study by Veronis Suhler predicts 8/13/2000 08:00:00 PM Eastern

Look for slower growth in the broadcast and cable television sectors between now and 2004, says Veronis Suhler & Associates, the New York investment banking firm, in a new forecast released last week.

At the same time, online advertising will soar sixfold to $24.4 billion by 2004, surpassing total cable advertising and growing at a remarkable 39.5% annually. Radio advertising will continue to grow at close to a 10% clip over the next five years.

VS & A says the communications sector will continue to be the fastest-growing sector of the U.S. economy over the next five years (as it was during the previous five years), increasing at an annual 7.8% rate.

U.S. economic growth will slow over the next five years, as the gross domestic product climbs at an estimated annual rate of 4.7% through 2004, compared to 5.6% from the five-year period of 1994 to 1999.

Ad spending on broadcast TV will climb 25% from the end of 1999 through 2004, realizing only half the growth rate of total U.S. ad spending during the same period, according to the new VS & A forecast.

Total advertiser spending in the U.S. will climb 51% from 1999 to 2004, to $249 billion. That's a growth rate of 8.6% a year.

Broadcast TV ad spending in the next five years will climb from $38.6 billion to $48.2 billion, growing at a rate of 4.6% annually. By comparison, broadcast TV ad spending grew at a rate of 5.6% from 1994 through 1999.

Network TV spending will rise at a faster clip than station spending, VS & A says. Network spending will reach $19.4 billion by 2004, growing 5.2% annually, while station spending will reach $28.8 billion with a 4.1% growth rate during the same period.

Cable and direct broadcast satellite growth will slow between now and 2004 to 8.8%, versus 13.1% from the previous five-year period. Nevertheless, the cable/DBS sector will grow at about twice the rate of broadcast TV. VS & A predicts that total spending in the cable/DBS sector (both advertising and subscription fees) will climb 53% to $86.4 billion.

But both cable advertising and subscriber-fee growth will slow over the next five years. VS & A predicts cable advertising will almost double from 1999 to 2004, to $21 billion, for an average annual growth rate of 13.4%. That's 6 percentage points less than cable's ad growth rate of 19.3% from 1994 through 1999.

Basic-cable subscriber fees will climb 32% through 2004, to $8 billion, growing at an annual clip of 8.1%. That's less than half the annual 17.4% growth that basic fees generated from 1994 to 1999.

Radio advertising will climb 37% over the next five years to $26.6 billion, with an annual growth rate of 9.5% from 1999 through 2004. That's a decrease of just one-half of a percentage point from the medium's 10% annual growth rate from 1994 to 1999.

Local radio will grow 38% over the next five years, to $20.3 billion, with an annual growth rate of 9.1%, down almost one percentage point from its 10% growth rate from 1994 to 1999.

 

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