TV ad rates to rise

22 October 2010

LONDON/WASHINGTON: Television advertising rates are likely to increase in most major markets this year, although the climate remains particularly challenging for US broadcasters.

Warc recently updated its Global Media Inflation Benchmarks Survey, covering nations including Australia, China, France, Germany, India and the UK.

In the US, it was estimated the cost of a 30-second television spot will decline 3.5% in 2010, the only American mainstream media channel to experience an overall decrease.

"Last year, we held back about 35% of our inventory with the expectation that pricing would improve along with the economy," Leslie Moonves, ceo, CBS, said in August.

"This year, demand and pricing were so strong we ended up selling about 80%, and we feel very good about our ability to improve our ratings in the year ahead and continue growing network revenues and profits."

During the same month, Jay Rasulo, cfo, Walt Disney, suggested trends appeared more positive after a difficult period.

"At the ABC Network, scatter pricing came in 33% above upfront levels. Thus far in Q4, ABC Network's scatter pricing is running almost 20% above upfront levels."

Elsewhere, the Survey predicted full-page colour newspaper ads, 30-second radio spots and standard outdoor billboards would register expansions topping 1%, outpacing internet banners.

China will post considerably greater increases, as TV climbs 31.5% in 2010, helped by surging competition and tighter regulations concerning the frequency and length of commercial breaks.

Radio and outdoor could also deliver jumps surpassing 17%, and press should generate single-digit gains, but cinema may stay flat year-on-year.

Online is due to enjoy a 27.5% uptick, assisted by rising penetration and digital literacy, alongside a sharpening desire among brand owners to reach the country's 420m web population.

Tencent, a leading new media company in China and operator of instant messaging platform QQ, reported a 54.5% leap in ad sales over its last quarter.

"Our advertising business achieved significant growth, leveraging our sponsorship of World Expo and our extensive coverage of the World Cup," said Ma Huateng, Tencent's chairman/ceo.

"Our portal has been gaining higher brand awareness and recognition among advertisers."

While expansion rates might slow for both TV and the net in China next year, they should still better 15% and 20% respectively.

In India, the net and outdoor head the charts in 2010 and 2011, although all main media are anticipated to improve in the assessment period.

In Western Europe, television was similarly pegged to witness sustained increases across France, Germany, Italy, Spain and the UK.

Bertelsmann, the European media group, stated that its RTL TV unit recorded "powerful growth" in the first half of 2010, boosting optimism regarding H2.

"The economy and especially the advertising markets are friendlier," said chairman/ceo Hartmut Ostrowski. "This makes us confident for the rest of the year."

France and Germany were the only two countries where the web could experience deflation in 2010 before charges rise again in 2011, when print will continue to struggle in Italy and the UK.

Data sourced from Warc/Seeking Alpha/Company reports; additional content by Warc staff