Global TV media costs surge almost a third post-pandemic

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.

Key quote

“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 reach is available here.

Sourced from WARC Media

Australian News Media Bargaining Code spurs growth in media firms

News that Australia’s News Media Bargaining code has achieved major changes is setting policy pulses racing around the world: the law that gives media companies the means to negotiate with global “unavoidable” platforms – read: Google and Facebook – shows that another settlement is possible.

Why it matters

Since last year, when Australia’s News Media Bargaining code came into law, the questions of whether it would work and, if so, whether it could work elsewhere, have dominated discussion.

A new piece in the media-focused trade publication Poynter notes that it has brought more than AU$200m (US$140m) into the country’s media industry now that almost all qualifying companies have struck deals. The Treasury is currently reviewing the code, with findings expected to be made public in October.

Refresher and effectiveness

The legislation allows the Australian government to decide that a digital platform comes under the news media bargaining code, which means it is required to negotiate with news publishers over revenue, and if this fails, final-offer arbitration can be called for, with platforms facing tough penalties for non-compliance.

Of course, the real point of the law is to force the platforms to negotiate before the government gets involved, which appears to have happened. This is, however, a significant criticism: individual deals mean that the details are not known, and many smaller publications could be ripped off.

Does it work?

According to Poynter, yes. Many publications have been able to grow their editorial departments, with The Guardian adding 50 journalists to its Australian operation. Things are good for the moment, but once these deals end, the ball is once more in the platforms’ court.

Then there are the publications that didn’t make the cut. Facebook, for instance, has resisted deals with some non-commercial or small publishers, which has led to calls from MPs for the government to step in and force negotiation.

Around the world

Canada is closest to passing an Online News Act similar to the Australian code but with additional clauses on transparency.

The United States has seen a similar bill tabled.

Of course, what has also happened is that the platforms have been able to get ahead of the game by making deals with major and influential publications before laws come into force, thereby dampening calls for urgent reform.

Lawmakers ought to consider not just the impact on the largest but how to better the landscape for the smallest, most vulnerable publications, with transparency at the core.

Sourced from Poynter, WARC

Target’s key business metrics for inflationary times

Target, the retailer, is focusing on metrics including sales growth, market share and unit share as key metrics for its business as it navigates through inflationary times.

The background

In its last quarter, Target saw like-for-like sales rise by 2.6% on an annual basis, while traffic rose by 2.7%. The downside for the company was that quarterly profits declined by almost 90%, driven by price reductions on unwanted inventory. Such results hint at the challenges facing brands as they navigate a very fluid shopping environment.

The metrics

• Christina Hennington, Target’s chief growth officer, noted on an earnings call that “overall sales growth is one key indicator of the health of our business.”
• Market share, she continued, is “an equally important measure that we use to understand how we’re performing.”
  
• “And notably, during inflationary times like these, we heavily focused on unit share, specifically to better understand our relevance as compared to our competitive set, given that growth in both traffic and units is a strong proxy for the guests’ overall engagement with Target,” she added.
  

The reasoning

“Time and time again, these metrics have proven to be a better barometer for lasting success as compared to growth solely through average retail prices,” Hennington told investors.

Sourced from Seeking Alpha