The Internet is poised to overtake newspapers as the second-largest U.S. advertising medium by revenue behind television, according to PricewaterhouseCoopers’ Global Entertainment and Media Outlook for 2010 to 2014.
The online ad business, excluding mobile ads, is set to expand to $34.4 billion in 2014 from $24.2 billion in 2009, according to the report, which PwC plans to release Tuesday.
Newspapers, meanwhile, continue to suffer from a decline in advertising revenue. According to numbers released by the Newspaper Association of America earlier this year, print advertising revenue dropped 28.6% in 2009 to $24.82 billion. The PwC report estimates that print advertising in newspapers will hit $22.3 billion by 2014.
“Although the Internet did not fully escape the impact of the recession, its decline in the United States was much less severe than that of other advertising media,” the PwC report notes.
Shifts in consumer behavior, potential for inventory on the Internet, and increased broadband penetration in the U.S. are key factors in PwC’s projections, according to David Silverman, a partner at PwC.
In 2005, the broadband penetration in U.S. households was at 34%. An estimated 64% of households now have a broadband connection. The study notes that the federal government’s allocation of $7.2 billion of the stimulus plan for the expansion of broadband services, as well as the increasing availability of triple-play packages, which bundle Internet service with television and telephone service, are catalysts for growth in U.S. broadband access.
The report is particularly bullish on the growth of advertising across interactive media, video and email — predicting that this segment of the market will reach $6.6 billion in 2014 from $4.7 billion in 2009. Online TV is expected to propel this segment because it has limited ad inventory within a program, allowing online TV providers to charge premium rates.
The mobile advertising market also is poised for growth as wireless networks are upgraded and more Internet-enabled smart phones hit the market. Mobile advertising in North America is predicted to quadruple from $414 million in 2009 to $1.6 billion in 2014, according to the report.
PricewaterhouseCoopers releases its Global Entertainment and Media Outlook yearly. Actual growth in 2009 was slightly higher than projected in last year’s outlook, a spokesman for the company said.
By Lauren Goode, WSJ