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Alternative Media Spending Going Gangbusters

Written on
March 26th 2008
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by Sarah Novotny  |
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davidgoliath2.jpgADOTAS — The sputtering economy has failed to stymie spending on alternative media, according to a report from PQ Media. In 2007, spending on alternative media – such as social networks, mobile and interactive advertising – grew by an eye-popping 22% to $73.43 billion in 2007 and it is expected to grow by 20.2% in 2008 to $88.24 billion.

Spending on alternative media – which is slated to represent 26.6% of total U.S. ad and marketing spending by 2012 — is expected to post compound annual growth of 17% in the 2007-2012 period, eventually reaching $160.82 billion.

“By 2012, we anticipate one out of every four dollars spent on advertising and marketing will be earmarked for alternative media,” said Patrick Quinn, president and CEO of PQ Media. “Alternative advertising and marketing media are driving a new media order that presents vast opportunities for industry stakeholders, but also key challenges for some of the fastest-growing digital media segments. Technological advances have led to critical changes in consumer behaviors and media usage patterns, which have pushed the advertising and marketing ecosystems into a seminal period of transition. Driven by these market forces, brand marketers are seeking new strategies to connect with consumers through engaging means in captive locations, while at the same time providing proof-of-performance metrics. This confluence of trends is fueling the migration of dollars to alternative media.”

PQ Media broke alternative media into 18 segments – 12 alternative ad segments and six alternative marketing segments. Twelve of the 18 grew more than 20% in 2007 and are projected to drive the growth over the next five years.

In order of projected growth, these segments are: consumer-generated media, mobile advertising, videogame advertising, online video advertising, word-of-mouth marketing, advergaming and webisodes, product placement, search and lead generation advertising, and digital out-of home media. The largest alternative media segments in 2007 were event sponsorships and marketing, search and lead generation, e-direct marketing, online classifieds and displays, local pay TV, and product placement.

A few key breakdowns from PQ Media’s report:

  • Spending on alternative advertising, including online and mobile advertising and entertainment and digital out-of-home advertising, climbed 25.8% to $39.22 billion in 2007, and grew at a CAGR of 26.2% in the 2002-2007 period. Alternative advertising represented 17.7% of overall ad spending in 2007, up from a 7.0% share in 2002.
  • Spending on online and mobile advertising, including search and lead generation, online classifieds and displays, e-media, online video and rich media, internet yellow pages, consumer-generated ads, and mobile advertising, rose 29.1% to $29.94 billion in 2007, and increased at a CAGR of 31.4% in the 2002-2007 period. Growth was driven by brand marketers shifting budgets out of traditional advertising to reach key demographics that have increased online and mobile usage due to improvements in online and wireless technology, particularly with wider adoption of broadband access.
  • Spending on entertainment and digital out-of-home (OOH) advertising, including local pay TV, digital out-of-home media, video-on-demand (VOD), interactive TV (ITV), and digital video recorder (DVR) advertising, videogame and home video advertising, and satellite radio advertising, rose 16.2% to $9.28 billion in 2007, and climbed at a CAGR of 15.0% from 2002 to 2007. Spending was fueled by new ad insertion technologies, the pursuit of new ad platforms that reach young audiences; and the steady growth of local pay TV, satellite radio, and DVRs, subscribers.
  • Spending on alternative marketing, including branded entertainment and interactive marketing, rose 17.9% to $34.21 billion in 2007, and posted a CAGR of 17.5% in the 2002-2007 period. Alternative marketing represented 14.5% of total marketing spend in 2007, up from 8.7% in 2002.
  • Spending on branded entertainment marketing, including event sponsorship and marketing, paid product placement, and advergaming and webisodes, rose 14.7% to $22.30 billion in 2007, and climbed at a CAGR of 13.4% from 2002 to 2007. Growth was driven by deployment of media strategies aimed at being more interactive and entertaining than traditional media, as well as to engage target audiences in locations that are not impacted by ad-skipping technology.
  • Spending on interactive marketing, including e-direct marketing, word-of-mouth marketing, and e-custom publishing, rose 24.4% to $11.91 billion in 2007, and climbed at a CAGR of 28.6% from 2002 to 2007. Spending was driven by strong gains in segments that reach affluent and influential consumers with focused messages that are either opted-in to or come from very trusted sources.


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