Global TV media costs surge almost a third post-pandemic
Media & communications budgetsAdvertising expenditure & forecasts
Media inflation is driving up the cost of advertising across channels, with TV most affected, according to an analysis by WARC Media.
TV costs are rising fast
The latest Global Ad Trends* report, The rising cost of incremental reach, finds that, globally, TV CPMs (cost per thousand) have increased 31.2% since 2019 – the steepest incline in more than two decades – and are up 9.9% year-on-year in 2022.
The trend is especially pronounced in the US, where TV CPMs are forecast to reach $73.14 in 2022, an increase of 40.0% on pre-COVID costs.
For some categories the impact is heightened. According to WARC Media data, advertisers in the food category spent on average 79.8% of their budgets on TV in 2019, and in the automotive category, 67.7%. If they were to have maintained that same level of investment, by 2021 the volume of impressions would have decreased by 18 percentage points.
Digital media costs are increasing too
This twin trend of declining linear television viewership and rising TV media costs is encouraging advertisers to look elsewhere for incremental reach, but price pressure is being felt across the online media landscape.
Paid social CPMs increased by 33% between 2019 and 2021 (source: Skai) and the growing popularity of retail media formats is pushing up the cost of advertising on platforms like Amazon.
Channels such as broadcaster video on-demand (BVOD) provide an alternative source of incremental reach. However, over-the-top (OTT or streamed video) ad costs are rising too: inflation in advanced TV formats in the US is forecast to reach 9.9% in 2022, as per World Federation of Advertisers (WFA) figures.
Relative bargains can still be found in channels like radio
The pursuit of incremental reach has generally focused on digital audio-visual channels, as they offer a more straightforward transition from television. In comparison, offline channels are often under-utilised, despite not having witnessed the same levels of price inflation since 2019.
In Australia, the cost of radio media in 2022 remains 1.1% below pre-pandemic levels, while prices in the US are largely unchanged three years on.
A similar picture emerges in out-of-home (OOH), incorporating both static and digital panels: in the UK, outdoor ad prices are 3.1% lower than before COVID-19, while, in the US, OOH remains 5.8% cheaper than it was in 2019.
“As the global economy teeters on the brink of an inflationary recession, media costs may experience further volatility. Nonetheless, non-video channels are worth consideration if they are right for the audience” – Alex Brownsell, Head of Content, WARC Media.
*Global Ad Trends is a bi-monthly report which draws on WARC’s dataset of advertising and media intelligence to take a holistic view on current industry developments. A complimentary sample report of WARC Global Ad Trends: The rising cost of incremental reachis available here.
Online gambling is to come under the spotlight from the UK’s Information Commissioner – the data protection watchdog – into the targeting techniques deployed by the industry amid concern that problem gamblers are being exploited.
Why it matters
Gambling is addictive, and online gambling has made it easier than ever to access. As an industry, it is a heavy advertiser whose presence across football has long drawn criticism, even if the evidence that sponsorship leads to problem gambling is limited. As much for the sport as for the exchequer, the gambling industry makes a lot of money.
But a House of Lords report found that 60% of its profits come from just 5% of its users, a proportion that hints at the overspending of some individuals. UK gambling laws are currently under review – though the government’s proposals have been shelved repeatedly amid political turmoil.
More broadly, it could be an important moment for online advertising at large, as the investigation explores what kind of personal data is appropriate for advertising, especially in categories with potentially significant impacts on public health. It also highlights the major disparities in the regulation of online advertising relative to TV, where the industry has agreed to voluntary curbs.
The investigation, reported by the FT, is set to look at the tracking activity of Sky Bet, which is majority owned by Flutter Entertainment – which also owns major brands like Paddy Power and Betfair.
It’s the result of a critical report commissioned by Clean Up Gambling, a pressure group that also made the complaint, which alleges building of detailed profiles that are then used to win back profitable customers by using it alongside and with third parties. It argues that many users didn’t know they were being profiled.
The company argues that it doesn’t see users’ financial data beyond its own platform and intends to target social media ads away from problem users.
Yet it follows a £1.17m fine issued in March by the industry’s regulator, the Gambling Commission, against Flutter for emailing promotions to people who had opted out of communications.
In the current economic climate the tech sector’s appetite for virtual worlds appears to be declining, but Indonesia’s government sees them as an opportunity to wrest back control of the online world from the likes of Google and Facebook.
Metaverse hype has been everywhere since Facebook became Meta nine months ago. But now figures from workplace researcher Revelio Labs, reported by Bloomberg, show new monthly job postings across all industries with “metaverse” in the title declining 81% between April and June.
That coincides with the tech sector’s first stumble in its previously unstoppable forward march: Meta, Twitter and Snap all recently flagged falling ad revenues while Alphabet is growing at its slowest rate in several years.
Even as Big Tech seems to be reassessing the potential of the metaverse, the Indonesian government has just heralded PT Telkom Indonesia’s launch of “metaNesia” – a virtual world that aims to act as a platform for Indonesia’s micro-, small, and mid-sized enterprises to showcase their goods on an equal footing with larger foreign businesses.
Why it matters
One person’s problem is another’s opportunity – and Big Tech certainly has plenty of problems at the moment, from regulatory issues to political ones. The Financial Times highlights new EU rules driving towards interoperability of messaging services and, in the US, moves by the FTC to prevent tech giants simply buying up emerging potential competitors; at the same time, geopolitical divisions are leading away from the global internet towards a fragmented one
Those developments pose a potential threat to the network effect that has powered the tech giants to their current pre-eminence. Anything that loosens their grip on the ad dollars they have hoovered up along the way may occupy more of their time and effort than building new worlds (about which many people remain cynical in any case). It also creates a window for smaller, alternative players, such as metaNesia, to build a base.
As Indonesia’s State-Owned Enterprises Minister said: “Don’t let other countries create a new world with their own payment system, while the market remains in Indonesia. Then we will regret it.”
Beyond cost cutting: finding growth in an economic downturn
Brand growthBrand managementMarketing in a recession
During an economic slowdown, jumping to cost cutting can damage long-term brand health, but with prudent and thoughtful portfolio management, brands can still find ways to grow.
Focus on three areas
According to Anna Soisalo, Executive Director, Strategy & Product – Europe at agency ustwo, most prudent decisions brand owners can use to drive growth during an economic slowdown fall into three areas: