NEW YORK (AdAge.com) -- Media outlets may be increasing rapidly each day but consumption is another story. For the first time since 1997, U.S. consumers spent less time using media in 2006 compared to the previous year. Media usage per person declined 0.5% to 3,530 hours. This drop is mainly attributed to changing consumer behaviors and advances in the digital space, according to data by Veronis Suhler Stevenson.
"There's more and more media, and I don't think we really believe people are less interested in media," said Jim Rutherford, exec VP-managing director, VSS. "But one of the phenomena is the way people consume media is and has been changing for a while over time."
Web to replace newspapers
But in the VSS Communications Industry Forecast 2007-2011 -- its 21st edition of the report on media spending, usage and trends -- total communications spending in 2006 jumped 6.8%to $885.2 billion. This year's report projects this growth trend will continue over the next five years with internet advertising, which includes pure-play websites and digital extensions of traditional media, replacing newspapers as the largest ad medium in 2011.
Because of the high demand for quick updates and short news briefs readily available on the web, consumers now rely less on 30-minute broadcast or cable TV news shows and spend less time reading the Sunday paper, dropping time with ad-supported media 6.3%. But it isn't that consumers are no longer using media, they are just spending less time with it.
"Now they're consuming news through a faster means," Mr. Rutherford said. "They can download shows and watch shows on TiVo, or they might watch a clip of 'The Tonight Show With Jay Leno' instead the whole hour to catch the funny clip that everyone loves."
Even though consumers are spending less time with media last year, media usage on the institutional front -- including conferences, trade shows and business-to-business publications -- rose 3.2% to 260 hours per user. With its first-ever analysis of business and government media usage in the recent VSS Forecast, the bump in institutional sector is because more people want to search for knowledge about jobs rather than the new latest product release.
"The economy as a whole is more and more driven by knowledge than manufacturing," Mr. Rutherford said. "Knowledge is the key to success. Knowing this is a competitive edge. [People] need info that's as accurate and timely."
VSS categorizes the communications industry into four major end-user sections -- advertising, marketing, consumer and institutional -- as well as 19 different subsections where those end-users spend their money. According to the report, the institutional sector was the fastest-growing in 2001-2006 periods at a compound annual growth rate of 6.9% and made $226.9 billion in 2006.
Marketing became the largest communications sector, reaching $254 billion last year. However, advertising was the slowest-growing sector in the five-year period, as the rise in marketing and public relations came at the expense of broadcast TV, newspapers and general-interest magazines.
"In the overall advertising area, dollars are moving from advertising to targeted media," Mr. Rutherford said. "They're not willing to pay for broadcast TV advertising. Dollars have come into the targeted media, and the dollars shrink because the targeted media is more efficient."
At the rate that communications spending is going, VSS projects that spending in 2007 will increase 6.4% to more than $900 billion, and will grow to over 1.2 trillion in 2011. And with the rise of the digital space, VSS expects total internet advertising to reach about $62 billion in the next five years and will surpass newspapers as the country's largest medium.