The Financial Times headline:

Online ads to overtake US newspapers

The story:

The rapid growth of online advertising is expected to see the sector overtake US newspaper advertising in terms of size by 2011.

The forecast comes against a backdrop of declining advertising sales reported by newspaper groups this year in spite of continued strength in the US economy.

The findings are from a widely-watched annual research report on the media sector by Veronis Suhler Stevenson (VSS).

In the 2007 study, published on Tuesday, VSS forecasts that online advertising will grow by more than 21 percent per year to reach $62 billion in 2011, making it bigger than newspaper advertising, which is expected to total $60bn in 2011.

“The path of online advertising and newspaper advertising is a continuation of what we’ve been observing for many years, but it is finally getting to the point where the lines will cross,” said James Rutherfurd, managing director at VSS.

The VSS forecasts also illustrate the lag between changes in consumers’ behaviour and advertising spending.

The survey also measured the time spent on different media, and in 2007 the amount of time spent reading newspapers is expected for the first time to be overtaken by time spent online.

Spending by companies on information and media, including business-to-business magazine and trade shows, is also increasing, up 8.1 per cent in 2006 to $227 billion.

“Knowledge and information industries drive the US economy, meaning that information is a critical tool,” said Mr Rutherfurd.

“Companies are prepared to pay a lot of money to get that information.”

Good news if you are in the informartion business.

Bad news if you are in the newspaper printing business.

(Thanks to Michael Agar in London)

This is an interesting front page trend.

The new Daily Telegraph promotes its main stories inside the paper and online.

See the RED labels.

See the LISTEN one.

See the INSIDE ones.

See the ONLINE ones.

And create your own blog.

Well…now more than ever, they are dealing not just with print readers.

Audiences.

Communities.

Bill Gates, the founder of Miscrosoft, speaks about the future of reading (again):

“Reading is going to go completely online.

We believe that as we get the smaller form factor, the screen has gotten good enough.

Why is reading online better?

It’s up to date, you can navigate, you can follow links.

The ads in the online reading are completely targeted as opposed to just being run-of-print, where many of the readers will find them completely irrelevant.”

And about printed newspapers he said:

“The media itself will be quite, quite different.

Who can create this media, who can distribute it?

How do you find what you’re interested in?

I have a lot of friends in the newspaper industry, and of course, this is a tough, wrenching change for them, because the number of people who actually buy, subscribe to the newspaper and read it has started an inexorable decline.

In fact, when we look at it by age group, it’s quite dramatic how different that is.

People have found some combination of TV and the Internet as the way that they can get their news, even the local news that historically was only available in that print form.”