February 2012

51913b - Internet Publishing and Broadcasting in the US

51913b - Internet Publishing and

Broadcasting in the US
iExpert

Market Share

Google Inc. 11.9%

Facebook 7.0%
Apple Computer, Inc.
5.9%

Key External Drivers

Total US advertising
expenditure
Number of mobile internet
connections
Demand from search
engines
Demand from television
broadcasting
Internet traffic volume

Life Cycle Stage

Revenue Volatility
Capital Intensity
Industry Assistance
Concentration Level

Growth
Medium
High
None
Low

Regulation Level
Technology Change
Barriers to Entry
Industry Globalization
Competition Level

Light
High
Low
Low
Medium

This iExpert report presents only a fraction of the data available in IBISWorlds full-length industry reports. For full reports, visit www.ibisworld.com

51913b - Internet Publishing and Broadcasting in the US

This chart shows the size of the markets

that buy the industrys products or use its
services.

February 2012 IBISWorld iExpert

It is based on the proportion of revenue each

buying segment contributes to total industry
revenue.

This chart represents the latest cost structure

of the industry. It shows the proportion of
revenue each cost item absorbs, with the
remainder representing profit.
The comparison to all other industries in the
sector provides a benchmark that shows how
the industry differs from its peers.

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51913b - Internet Publishing and Broadcasting in the US

February 2012 IBISWorld iExpert

The Internet Publishing and Broadcasting

industry has experienced significant
growth during the five years to 2012. It is
characterized by minimal barriers and
consistent average profitability of 17.0%,
which have helped sustain demand.
IBISWorld estimates industry revenue has
increased at an annualized rate of 11.4%
since 2007, to reach $34.0 billion in 2012.
In recent years, the industry overcame
the hurdle that deterred its inception and
led to its eventual crash: monetization.
Advertising spending has begun to catch
up with advertising space, injecting almost
$30.0 billion into the industry in 2012.
That number is set to increase further as
firms transition brand-building campaigns
from old media to new; this advertising
comprises 90.0% of all advertising
spending, yet it still makes up a relatively
small portion of internet ad spending. At
the same time, the growing popularity of
mobile internet connections is expected to
expand the amount of advertising that
individuals will be exposed to, causing
advertising dollars to rise. As a result,
industry revenue is projected to grow at an
average of 16.2% annually during the five
years to 2017, with revenue totaling $71.9
billion that year. The majority of that

growth is expected to come from greater

advertising expenditures.
The picture has not been as rosy for
the paid-content market. While Apple has
been able to capitalize on the success of its
consumer electronics and integrated
iTunes store to earn healthy returns selling
music and video over the Internet, other
firms have been impeded by negotiations
with content owners and consumers'
general unwillingness to pay for intangible
goods, like digital content. Generally,
younger generations have been
increasingly unwilling to pay for this
content, making future growth prospects
for the paid-content business dim. Paid
content currently accounts for 9.7% of
industry revenue, and this number is
expected to shrink as growth in advertising
offsets a stagnant paid-content market.
However, as a whole, the industry will
continue to experience strong growth.
Revenue is expected to increase
dramatically from 2011 to 2012, at a rate of
12.9%. While the majority of the industry's
growth will filter to the advertising
networks that connect advertisers with
content sites, competition between the ad
networks will likely drive an increasing
amount of money to the content providers.

THREAT

OPPORTUNITY

Demand from TV broadcasting

Internet publishers and broadcasters face
competition from TV broadcasters for
content and viewers. TV networks are
typically able to secure advertising contracts
and revenue prior to broadcast, allowing
them to invest more money in new content
than most internet producers. TV
broadcasting competes directly with internet
publishing as an information and
entertainment platform and for advertising
dollars. Demand from TV broadcasting is
expected to increase over 2012, representing
a threat to the industry.

Number of mobile internet connections

While the rate of growth of broadband
connections has begun to taper off as the US
market approaches saturation, the number
of people accessing the internet via mobile
connections has grown rapidly. Therefore,
users can be exposed to internet-based
content more often. Furthermore, devices
that employ the mobile internet may
incorporate more advertising, so they are
valuable to industry firms. The number of
mobile internet connections is expected to
increase substantially in 2012, representing
an opportunity for the industry.

www.ibisworld.com | 1-800-330-3772 | info@ibisworld.com

51913b - Internet Publishing and Broadcasting in the US

ISSUE
While the rate of growth of
broadband connections has begun to
taper off as the US market
approaches saturation, the number
of people accessing the internet via
mobile connections has grown
rapidly. Therefore, users can be
exposed to internet-based content
more often.
QUESTIONS
Do you regularly monitor the
number of mobile internet
connections in the United States?
Have you experienced an increase in
demand as more consumers use
mobile internet connections? How
can you use faster connections to
your company's benefit?

ISSUE
It is important to develop a clear
niche. Successful websites cultivate
a unique culture and continuously
appeal to their user base.
QUESTIONS
What is your company's niche
audience? How have you targeted
your website to this client base?
What methods do you use to
advertise your website and attract
more customers?

ISSUE
Advertising is one of the most potent
methods of generating revenue for
internet publishers. When
advertisers increase their budgets,
internet publishers generally
benefit, especially as the industry
captures a significant share of new
advertising money.
QUESTIONS
What proportion of your revenue is
derived from advertising? How do
you generate advertising for your
company? Do you have key
contracts with advertisers that are
relevant to your company? How can
you form new relationships with
advertisers?

ISSUE
Word of mouth recommendations
are an invaluable way to build up a
website's user base. Websites that
can successfully get users to talk to
their friends about the site,
especially offline, tend to grow
faster.
QUESTIONS
How do you develop greater word of
mouth recommendations? Do you
rely more on word of mouth
recommendations or paid
advertising to promote your
website? Have you implemented any
tools that allow people to easily
spread the word about your website?

February 2012 IBISWorld iExpert

ISSUE
Internet publishers and
broadcasters face competition from
TV broadcasters for content and
viewers. TV networks are typically
able to secure advertising contracts
and revenue prior to broadcast,
allowing them to invest more money
in new content than most internet
producers.
QUESTIONS
How does your company compete
with TV broadcasting? Can you
upgrade any of your services to
better stream live sporting events?
How do you differentiate your
offerings from TV broadcasters?

ISSUE
The ease with which digital media
can be duplicated and redistributed
means firms selling content must
contend with the threat of piracy.
QUESTIONS
Have you faced issues with piracy?
How can you combat these issues?
What anti-piracy strategies have you
implemented?

www.ibisworld.com | 1-800-330-3772 | info@ibisworld.com

February 2012 IBISWorld iExpert

51913b - Internet Publishing and Broadcasting in the US

Industry: Internet Publishing and Broadcasting

Sector: Information

Overall risk in the Internet Publishing and

Broadcasting industry is forecast to be LOW
over 2012. The primary positive factors
affecting this industry are a growth life cycle
stage and a very low growth risk score.
Overall risk will be slightly higher than the
previous year, a result of unfavorable
movements in competition from arts,
entertainment and recreation as well as total
US advertising expenditure. However, their

Structural risk will be MEDIUM-LOW over

the outlook period. The biggest source of
difficulty within the industry is the low
barriers to entry. Low barriers to entry
enable new players to easily enter the
marketplace, heightening competition in the
long run. This is detrimental as businesses
competing fiercely for market share are

Structure component
Barriers to Entry
Competition
Exports

impact will be partially offset by a projected

fall in growth risk.
Risk component

Weight

Score

Structural risk

25%

4.49

Growth risk

25%

1.00

Sensitivity risk

50%

4.18

Overall risk

3.46

forced to incur expenses to differentiate their

offerings, keep prices low to entice demand
or both. The result is a greater likelihood of
declining revenue and lower profits.
However, a positive for this industry is the
growth life cycle stage, which indicates
increasing demand and an array of untapped
niches. This contributes to a greater chance
of success through robust revenue growth
and higher profit margins.

Level

Trend

Weight

Score

Low

Steady

13%

9.00

20%

5.00

7%

1.00

Medium
Low

Steady

Imports

Low

Steady

7%

2.00

Assistance

None

Steady

13%

7.00

Life Cycle Stage

Growth

20%

1.00

Revenue Volatility

Medium

20%

5.00

Structural risk

4.49

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51913b - Internet Publishing and Broadcasting in the US

February 2012 IBISWorld iExpert

Growth risk is expected to be VERY

Growth component
LOW over the outlook period.
2009-11 Annualized growth
IBISWorld forecasts that annual
2011-12 Forecast growth
industry revenue will grow 16.1% to
Growth risk
$44.9 billion. In comparison, revenue
expanded 21.8% per year between 2009
and 2011.

IBISWorld has identified and weighted the

most significant external factors affecting
industry performance.
Sensitivity Component

Revenue

Weight

Score

18.8%

25%

1.00

12.9%

75%

1.00
1.00

These factors are scored separately, then

weighted and combined to derive the
sensitivity risk score.
Weight

Score

Total Media Expenditure (Advertising)

35%

0.76

Demand from search engines

15%

1.23

Demand from television broadcasting

15%

0.99

Sensitivity risk

In 2012, the average risk score for all US

industries is expected to be in the MEDIUMLOW band. Furthermore, the risk score for
the Information sector, which includes this
industry, is also at a MEDIUM-LOW level.

4.18

Therefore, the level of risk in the Internet

Publishing and Broadcasting industry will be
lower than that of the US economy and the
Information sector.

www.ibisworld.com | 1-800-330-3772 | info@ibisworld.com