Digital Poised to Drive Consumer, B2B Markets, According to PwC Report
Digital is poised to become the principal driver of new advertising revenue and product development in consumer and business-to-business publishing, according to a study released this week by PricewaterhouseCoopers, "Global Entertainment and Media Outlook: 2011-2015."
The Consumer Market
In the North American consumer magazine market, spending on digital advertising will reach nearly $2.8 billion by 2015, up 149 percent from 2010 levels. On the print side, ad spending should increase 19.6 percent, from $10.8 billion in 2010 to $13 billion in 2015.
Circulation gains in digital are expected to generate $611 million for consumer publishers by 2015, up from $4 million in 2010, while print circulation revenues are expected to decrease from $9.2 billion in 2010 to $8.8 billion in 2015.
The modest growth in print advertising over the next five years, "will be muted by declining readership as consumers shift to online and digital sources and reduce their use of print magazines," the study says.
Special interest titles will be less vulnerable to this shift than news and gossip magazines, but overall, spending on print in 2015 will remain lower than 2006-08 levels, the study says.
Total advertising and circulation revenue will hit $25.1 billion by 2015, the report projects, up from $21.16 billion in 2010 (a 3.5 percent compound annual gain), but still lower than the $24.6 billion hit in 2008.
The Business-to-Business Market
The business-to-business market saw a 0.3 percent drop in 2010 after an 11.7 percent drop in 2009, as a rebound in revenue from business information was offset by declines in directory advertising, trade magazines and professional books, the report says. Spending is expected to rise beginning in 2011 at a 4.1 percent compound annual rate, to $93.8 billion by 2015.
Total advertising spending in the business-to-business market (directory and trade magazine) totaled $23 billion in 2010 and is expected to hit $25.1 billion by 2015. Revenue from business information is expected to increase from $45.3 billion in 2010 to $59.2 billion in 2015.
The financial information market began to recover in 2010, seeing a 0.8 percent increase. While housing remains weak, spending on marketing information is expected to rise with the development of new marketing tools and growth in consumer spending. Marketing information is expected to expand at a 5.2 percent compound annual rate to $19.1 billion in 2015.
New information technologies are allowing for new revenue-generating products to be developed, such as medical data sold as software packages and predictive analysis enabled by algorithms and data-streaming technologies, as well as lead generation built on behavioral and demographic information and tools that analyze social network activity, the report says.
The report sees "the emergence of a digital content market" and advertising growth propelled by a stronger economy as the primary drivers leading to a rebound in trade magazines beginning in 2011.
Trade magazine print advertising in the U.S. is expected to increase from $7.36 billion in 2010 to $9.4 billion in 2015, a compound annual rate increase of 5 percent (still below the 2006 high of $10.9 billion), while U.S. trade magazine digital advertising will increase from $1.18 billion in 2010 to $2.4 billion in 2015, a compound annual rate increase of 15.7 percent. Overall North American trade magazine advertising (print and digital) will average 6.8 percent growth compounded annually from 2010 to 2015, according to the report.
The U.S. trade magazine print circulation spending market will increase from $1.38 billion in 2010 to $1.4 billion in 2015, a compound annual increase of 0.3 percent, while U.S. trade magazine digital circulation is predicted to go from $3 million in 2010 to $231 million in 2015, a compound annual increase of 138.4 percent.
The report bases its estimates of the growth in trade magazine digital circulation on the expanded use of paywalls (full and partial), the monetization of archived content and the growth of the tablet market.