STAMFORD, CT — Spending on alternative media jumped to $73.43 billion in 2007, an increase of almost 22-percent over the previous five years. What’s more, the category is expected to continue its rapid ascension in 2008, despite a slowing economy, as brand marketers scramble to stay in step with a rapidly changing media landscape, according to research released Tuesday by PQ Media, a media econometrics research firm.Alternative media spending grew at a compound annual rate of 21.7-percent from 2002 to 2007 as brand marketers increasingly turned to alternative advertising and marketing strategies to offset challenges posed by new technology, changing consumer behaviors, media fragmentation and multitasking. Growing demand for improved return-on-investment metrics played a role as well, according to PQ Media’s “Alternative Media Forecast: 2008-2012.”

Alternative media, including 18 digital and non-traditional media segments, accounted for 16.1-percent of total advertising and marketing spending in 2007, up from only 7.9-percent in 2002.

PQ Media expects the momentum to continue in 2008 and through the rest of the decade as brand marketers seek new ways to deal with the evolving media landscape. Total spending on alternative media is forecast to grow 20.2-percent to $88.24 billion in 2008 and post compound annual growth of 17-percent in the 2007-2012 period, reaching $160.82 billion, according to the report. Alternative media is forecast to represent 26.6-percent of total U.S. advertising and marketing spending in 2012.

“By 2012, we anticipate one out of every four dollars spent on advertising and marketing will be earmarked for alternative media,” said PQ Media President and CEO Patrick Quinn. “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.”

While all 18 segments of PQ Media’s Alternative Media Matrix™ — including 12 alternative advertising segments and six alternative marketing segments — posted double-digit growth in 2007, 12 of the 18 segments grew faster than 20-percent for the year. These same 12 segments are projected to drive growth over the next five years, including in order of projected growth, 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.

Spending highlights and key trends impacting each major sector and related segments of alternative media include:
• Spending on alternative advertising, including online and mobile advertising and entertainment and digital out-of-home advertising, climbed 25.8 percent to $39.22 billion in 2007, and grew at a CAGR of 26.2 percent in the 2002-2007 period. Alternative advertising represented 17.7-percent of overall ad spend in 2007, up from a 7.0-percent 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-percent to $29.94 billion in 2007 and increased at a CAGR of 31.4-percent 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 advertising — including local pay TV, digital out-of-home media, video-on-demand, interactive TV and digital video recorder advertising, videogame and home video advertising, and satellite radio advertising, rose 16.2-percent to $9.28 billion in 2007, and climbed at a CAGR of 15-percent 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 DVR subscribers.

• Spending on alternative marketing, including branded entertainment and interactive marketing, rose 17.9-percent to $34.21 billion in 2007 and posted a CAGR of 17.5-percent in the 2002-2007 period. Alternative marketing represented 14.5-percent of total marketing spend in 2007, up from 8.7 percent in 2002.

• Spending on branded entertainment marketing, including event sponsorship and marketing, paid product placement, and advergaming and webisodes, rose 14.7-percent to $22.30 billion in 2007 and climbed at a CAGR of 13.4-percent 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-percent to $11.91 billion in 2007 and climbed at a CAGR of 28.6-percent 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.