PR, word-of-mouth spending to outpace traditional: VSS

NEW YORK: Spending on traditional PR is expected to increase at an 8% compound annual growth rate through 2015, reaching nearly $5.4 billion at that time, according to a forecast released this week by investment firm Veronis Suhler Stevenson.

NEW YORK: Spending on traditional PR is expected to increase at an 8% compound annual growth rate through 2015, reaching nearly $5.4 billion at that time, according to a forecast released this week by investment firm Veronis Suhler Stevenson.

When combined with word-of-mouth marketing, the segment is expected to grow at a 14% CAGR, reaching nearly $11 billion in expenditures by 2015. The spending increase is due to PR's expanding role in integrating marketing campaigns and social media boosting growth in word-of-mouth marketing, according to the study.

Marketing managers of businesses have high aspiration for word-of-mouth marketing and social media,” said John Suhler, president and general partner of VSS. β€œIt's where the action is these days.”

The combination of PR and word-of-mouth is the only traditional marketing segment to outperform the economy. Overall traditional marketing, including consumer promotion, b-to-b promotions, and PR and word-of-mouth, is expected to grow at a slower pace than GDP expansion at a 3.6% CAGR. Traditional marketing spending is expected to reach $84.35 billion by 2015, according to VSS.

In 2005, traditional marketing accounted for 8% of total US communications spending. Last year, that number dropped to 7%. By 2015, spending on traditional marketing is expected to decline further to 6%, according to the report.

B-to-b promotional spending will grow at a 3% CAGR through 2015, while consumer promotion spending will increase by 5.5%, according to VSS. The firm predicted that communications services, including various advertising and marketing categories, will increase 4.1% this year to $1.12 trillion and at a 5.5% CAGR through 2015.

The firm said it published its 2011 report later than usual because of the downturn in key economic indicators in the third quarter.

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