From media agencies to investment banks to media gurus, everyone is making predictions regarding how the media industry will perform in 2005. While opinions are diverse and there is not complete agreement, the general consensus appears to be that 2005 will witness growth in overall media spending, both in the United States and worldwide. In addition, according to nearly everyone who has weighed in on the issue, online media spending will continue to garner a larger piece of the pie, with growth within this segment far outpacing the growth of the overall media industry.

Predictions for overall media spending vary, but they seem to universally point towards a relatively strong rate of growth for 2005. For instance, Carat, a media agency, has forecast worldwide growth in overall media spending to reach 4.9 percent and growth in U.S. media expenditures to reach 4.5 percent. It also predicts that Internet advertising will grow even faster, realizing a growth rate of around 20 percent.

The Jordan Edmiston Group predicts strong growth in mergers and acquisitions in the media industry, especially in the area of online media. According to the company, 2004 witnessed a 50 percent increase in the aggregate dollar value of media and information M&As and a remarkable 199 percent increase in the value of online media deals. In addition, the firm is even more optimistic than Carat about online media spending, forecasting a growth rate of approximately 30 percent.

Media forecaster Jack Meyers believes that overall ad spending will increase by 6.3 percent over 2004. Concurring with the Jordan Edmiston Group, he sees online ad spending exploding at a rate of around 30 percent over 2004 levels. He also predicts an anemic growth rate of 1.5 percent for national and local television and a four percent rate of growth for consumer magazine ads.

According to research by Merrill Lynch, 59 percent of advertisers plan to boost their total media expenditures in 2005. The research also showed that the rate of increase was largely predicted to be within the range of one to five percent, with only 16 percent of advertisers planning to increase their total media expenditures by more than 5 percent in 2005.

Interestingly, the vast majority of the forecasts call for growth rates that are below those we witnessed in 2004. This anticipated slowdown in growth is related to the same macroeconomic factors that are potential drags on the global economy. Carat believes that factors such as oil price instability, the weak U.S. dollar, and the U.S. trade deficit will all have a mild sedative effect on the growth of ad spending in 2005.

Other trends in online advertising for 2005, as discussed in a recent article in MediaPost’s MediaDailyNews, include a substantial increase in, and dependence on, performance measurement; the continued blending of online, digital and traditional media; the proliferation video content across television, broadband and cell phones; the re-aggregation of small audience segments into larger groupings to re-establish economies of scale; and the growth of behavioral targeting as an alternative to rising costs of search advertising.

Regardless of the exact figures, it seems clear that 2005 should be a strong year for the media industry, especially for the online segment. Quantifiable indicators as well as stakeholders’ sentiment has not been this strongly positive since the late 1990’s. Barring some major shock to the general economy, the media industry should fair quite well in 2005, particularly the Internet segment.