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

Warby Parker ‘normalises’ marketing spend

Warby Parker, the eyewear company, will “normalise” its marketing spend to pre-pandemic levels, a shift driven in large part by consumers returning to its brick-and-mortar stores.

Why it matters

The COVID-19 pandemic led many brands to adjust their marketing budgets as physical stores closed and shoppers made a greater amount of purchases online. As consumers return to many of their old habits, however, brands will need to reassess spending patterns accordingly.

The background

• While Warby Parker initially rose to prominence as an online direct-to-consumer brand, by the end of its last trading quarter, the brand had over 175 physical stores.
• Steve Miller, its chief financial officer, said on an earnings call that its marketing budgets were shaped in part by the varying economics of online versus offline retail.
• “In general, we tend to see that our e-commerce business is more highly correlated with marketing spend and performance marketing dollars,” he said.
• By contrast, “our stores serve as billboards and don't need as much marketing support,” Miller added.

The strategy

• As consumers switched online during the pandemic in 2020 and 2021, the brand “elevated our marketing spend as a percentage of revenue” accordingly.
• However, as the sales mix now more closely resembles that from 2019, before the onset of COVID-19, Warby Parker is refining its marketing strategy.
• “We are normalizing back to a level that we observed pre-pandemic that we think matches the business mix,” said Miller.
• As a percentage of revenue, that means a drop from 15.6% in the second quarter of 2021 to 13.8% in the same period in 2022. Long term, the aim is to reach the “12% level that we were at pre-pandemic,” Miller said.

Sourced from Seeking Alpha

Women’s media readership grows in post-Roe US

Following the Supreme Court’s undoing of Roe v Wade, the 1973 decision that had blocked states from banning abortion, the New York Times reports that readers are seeking out writing about women’s issues with in-depth coverage of broader civil rights in the US.

Why it matters

While the core of this story is not about advertising, the implications for brands are that they cannot sit on the fence and please both sides. Brands should already be aware of the ethics (or lack thereof) of their data brokers, and the position of the websites they work with should also be critical.

What’s going on

A slate of different publications and websites, which had seen declines in recent years, are seeing new interest in civil rights coverage from a feminist perspective:

• Jezebel, of Gawker and now G/O Media, has seen +18% traffic since May (when the Supreme Court’s draft decision leaked)
  
• The 19th, a non-profit on gender politics and policy, has seen +67% readership for abortion-related items
• The Cut, part of New York Magazine, has seen traffic to abortion rights stories almost triple.

The Times piece indicates that not only have these publications met their moment but are chiming with their audience’s position, while giving context and exploring the implications of developments around the US.

Context

It comes at a time of an intensely fragmented US media environment. The influence and ideological isolation of Fox News and its viewers has been well-documented. Less well-documented but also troubling are the stories of TikTok influencers freelancing reproductive advice, especially with many encouraging their viewers to reject hormonal birth control. Critics of these influencers argue that they are playing into the hands of the far-right.

As a WIRED story points out, influencers deploy varying levels of scientific accuracy, but generally focus on options that are seen as more “natural”. Stories like this might help indicate why women-focused media are finding a receptive audience at a time when women’s rights are under attack from groups both knowing and, sometimes, unknowing.

Sourced from the New York Times, WIRED

Utilities are on a par with tobacco and gambling brands

Utility firms are now viewed as negatively as tobacco and gambling companies by Britons, according to new data from research firm YouGov.

What’s happened

Six in ten (63%) Britons have a negative view of utility companies, very similar to the proportion having negative views of tobacco companies (66%) and gambling firms (62%).

The negative trend in consumer sentiment has been evident for some time, but marketing efforts to address people’s growing worries have not always been stellar. Back in January, it was already evident that UK utilities faced particular challenges in the year ahead, especially related to surging energy bills for customers, and some responses were woefully inadequate.

Why it matters

It’s a disaster – and not just from a marketing point of view – when brands supplying essentials like power and water are bracketed in the mind of the public with “vices” like smoking and betting. 

Pressure is rising across the political spectrum, with suggestions ranging from pushing energy firms to invest in green energy right through to arguments in favour of capping prices and potentially nationalising these vital industries.

Marketers need to up their game – and they need help from a C-suite that isn’t raking in excess profits and trousering huge pay packets while hiding behind concepts like “maximising shareholder value”.

Sourced from YouGov, Reuters, Financial Times, The Week, WARC