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Communications Spending will Continue to Rise in the U.S.

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September 28, 2012

Communications Spending will Continue to Rise in the U.S.

By Ashok Bindra, TMCnet Contributor

A recent study by global private investment firm Veronis Suhler Stevenson (VSS) shows that spending within the U.S. Communications Industry will increase 5.2 percent in 2012 to reach $1.189 trillion as consumers and businesses increasingly embrace digital technology. The study suggests that the consumer spending levels have increased significantly after the recent worldwide economic downturn.

The 26th edition of the VSS Communications Industry Forecast 2012-1 indicates that the U.S. Communications Industry spending grew 4.4 percent in 2011 to $1.129 trillion despite a sluggish economy in which nominal gross domestic product expanded 3.9 percent.

During 2006-2011 duration, spending rose at a compound annual growth rate (CAGR) of 2.7 percent, surpassing GDP by a 0.3 percentage point. VSS expects the Communications Industry to grow at a 5.2 percent CAGR to $1.455 trillion by 2016, almost two times the growth rate during the past five years. At that pace, as per the VSS study, the Communications Industry will remain the fifth-largest industry among 15 economic sectors in 2016.

According to VSS forecast, the key driver is the digital communications and services, which encompass content, technology and user access. Through the use of ever-evolving platforms and channels, digital is giving a rising number of communications companies the power to more effectively target and connect with both consumer and business customers, says the VSS study.  

As per this investigation, traditional communications companies that relied heavily on print products continue to make the transition to digital, and those that fully embrace it are the ones most likely to remain relevant to their audiences.

In 2006, VSS found that digital-related expenditures represented 16.7 percent of total Communications Industry spending. It reached 26.5 percent in 2011. VSS projects that it will grow to 39.3 percent by 2016.

In a statement, said John Suhler, co-founder and president of VSS, “Digital’s influence is now a constant and significant factor in every sector, segment and sub-segment of the US Communications Industry.”

“At the same time as digital technology and innovation continue to spur growth in the industry or propel the Communications Industry forward, emerging digital media and services are significantly changing consumption habits among both institutional and consumer end-users. These developments will drive digital-related expenditures to constitute nearly 40 percent of the overall U.S. Communications Industry spending by 2016,” added Suhler.

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Edited by Brooke Neuman

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