Advertising spending on alternative media, including online, mobile and digital out-of-home platforms, is expected to grow 20.2% to $88.24 billion in 2008, according to PQ Media. By 2012 a compound annual growth of 17% will see adspend reach $160.82 billion.

The report, PQ Media Alternative Media Forecast: 2008-2012, found that alternative media, including 18 digital and non-traditional media segments, accounted for 16.1% of total advertising and marketing spending in 2007, up from only 7.9% in 2002. Alternative media is forecast to represent 26.6% of total U.S. advertising and marketing spending in 2012.

The segments expected to drive this growth are user-generated content, mobile advertising, video-game 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 on online and mobile advertising rose 29.1% to $29.94 billion in 2007 and increased at a CAGR of 31.4% in the 2002-2007 period. Spending on entertainment and digital out-of-home advertising, including local pay TV, digital out-of-home media, VOD, interactive TV and digital-video-recorder advertising, video-game and home-video advertising, rose 16.2% to $9.28 billion in 2007, and climbed at a CAGR of 15% from 2002 to 2007.

Spending on alternative marketing, including branded entertainment and interactive marketing, rose 17.9% to $34.21 billion in 2007, and posted a CAGR of 17.5 % in the 2002-2007 period.

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