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

‘MROI’ informs Etsy’s marketing strategy

Etsy, the online marketplace, relies on a dynamic “MROI” approach to marketing to ensure its return on investment is hitting benchmarks right down to the “last marginal dollar”.

Why it matters

Measuring return on investment is a complex task, with both short- and long-term components. With a growing number of tools and solutions available to help brands understand the instant impact of their expenditure, however, it can be tempting to focus on immediate returns and not think about brand building as requiring an extended duration.

Understanding “MROI”

• Rachel Glaser, Etsy’s chief financial officer, said on an earnings call that “MROI” aims to ensure that, for its spend, “the marginal dollar is still hitting our internal threshold for [being] ROI-positive”.
• Its approach, she said, is “very dynamic”, and includes factors like rising or falling cost per click and cost per thousand, as well as spikes in visits, demand and lifetime value.
• “It dynamically will adjust to allow us to keep spending until that last marginal dollar of spend is no longer positive against our ROI thresholds,” Glaser said. “So, we will constantly be rational in that regard. If there is incremental flow-through from increasing top line growth, we would automatically be reinvesting that if we think that the ROI is going to achieve our thresholds.”

Measuring TV success

• While it is harder to apply this kind of methodology to media like linear television, Etsy’s model in this area is “semi-dynamic,” reported Glaser.
• Building on this theme, one measure of success for Etsy’s TV ads is “within six minutes of the ad running, do we see a result?” said Josh Silverman, Etsy’s CEO. “We really focus on near-term results to give us confidence.”
• It also uses a variety of other real-time metrics for TV spend, and looks at the impact on metrics like brand awareness and consideration after a month or two.

Learnings for the long term

• In 2021, Etsy used television advertising in Germany at an earlier stage than it normally would, and at a “bigger” level.
• “Now in 2022, we’re seeing Germany really outperform our expectations,” Silverman said.
  
• This example also demonstrates how the impact of advertising investment has long-term elements, too. “It suggests to me that there might be as much as a year lag from when you make a real investment and cause a splash to when people have had a chance to internalize that, and maybe hear from a few friends about Etsy in a way that’s reinforcing and then come and try it themselves,” Silverman said.
  

Sourced from Seeking Alpha

Podcast fatigue, or a maturing medium?

New media can sometimes elicit too much excitement – perhaps some were guilty of believing podcasts would continue to defy gravity and keep growing; the sober reading is that podcasts are a maturing form.

Why it matters

Podcasts were a surprise hit of lockdowns, as listeners who had sought company on their commutes now sought it while stuck at home, but as countries and economies have opened up, more complicated behaviour patterns have emerged.

Did you know that WARC also has a podcast? See if it fits into your complicated behaviour patterns here.

The news

Effectively, the story is that something other than an upward curve in listenership is emerging.

• The Verge’s Hot Pod column notes an Edison Research and Libsyn study into Latino American podcast listeners, where 2021 had seen an incredible 44% increase in listening; over a third of the sample listened to podcasts monthly. However, now in 2022, 36% has fallen back to 34%.
• Other sources, like the Sounds Profitable newsletter, have questioned the mismatch between the roughly half of (US) podcast listeners that have only started getting into podcasts in the last year or so, compared with the relatively modest growth curve in listenership. This, they argue, implies serious churn issues, which the more evangelical among the podcast movement prefer not to countenance.

The reasons

Reasons for churn or (very slight) falls in listenership are many and complex. It’s difficult for there to be consistent hit shows that can keep people hooked, especially across languages.  

From an advertising perspective, podcasts remain an undervalued opportunity. Remember, around half of the US adult population is a light (monthly) listener, while 28% listen weekly. It may not be the new new thing, but it remains an incredibly valuable, high-reach, high engagement medium. Many buyers agree.

Sourced from The Verge, Sounds Profitable

UK consumer confidence hits a new record low

Faced with unrelentingly bad economic news and the prospect of worse to come, consumers are responding with “a sense of capitulation”, according to the latest data from GfK.

By the numbers 

GfK’s long-running Consumer Confidence Index decreased three points in August to -44, the lowest since records began in 1974. All five component measures were down in comparison to last month’s figures: 

• personal financial situation over the past 12 months down 2 to -25 
• personal financial situation over the next 12 months down 3 to -31 (and 42 points lower than a year ago)
• general economic situation over the past 12 months down 2 to -68 
• general economic situation over the next 12 months down 3 to -60 (and 54 points lower than a year ago)
• major purchase index down 4 to -38.

Why it matters

With ever-rising prices – inflation is now at 10.1% – and falling real pay, people are understandably worried about their future and looking for help from any quarter. The government seems to have gone AWOL, so businesses are the next obvious candidate – and as the Edelman Trust barometer found earlier this year, “on competence, business now leads government by a 53-point margin and is viewed as more ethical than government by 26 points”.

Just as the UK’s supermarkets emerged from the initial COVID-19 period with their reputations enhanced, so the current crisis could be an opportunity for sensitive brands to achieve a similar outcome.

Key quote 

“These findings point to a sense of capitulation, of financial events moving far beyond the control of ordinary people. [T]he strain on the personal finances of many in the UK is alarming. Just making ends meet has become a nightmare and the crisis of confidence will only worsen with the darkening days of autumn and the colder months of winter” – Joe Staton, Client Strategy Director, GfK. 

Sourced from GfK, Financial Times, BBC, WARC