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

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

Making the business case for women’s football

Women’s football could see a sixfold increase in its commercial value over the next decade, reaching an annual value of €686m by 2033.

That’s divided between matchday income (€135m), sponsorship (€295m) and media rights (€256m).

Why it matters

The figures come from a UEFA report, The Business Case for Women’s Football, which details growing fan numbers, improving player standards and a positive image – and argues that “the time to get involved in the women’s game is now”.

There’s also a reverse case building as the men’s game rakes in ever more money in TV rights – money which broadcasters will expect to recoup at least in part through advertising. The women’s game could offer a cheaper and more effective option for some categories and brand-owners. 

Context 

A successful Women’s Euros competition has heightened expectations for the women’s game, but the money continues to flow to the men’s game.

The Financial Times reports that the English Premier League will pocket £6bn (€7.1bn) this season on TV rights, almost twice as much as Spain’s La Liga (€3.7bn). Add on Germany’s Bundesliga (€3.6bn), Italy’s Serie A (€2.4bn) and France’s Ligue 1 (€1.8bn) and the TV rights of the men’s game in Europe far exceed anything the women’s game can hope to make in total commercial terms in the next decade.

Takeaways 

• 47% of women’s leagues surveyed by UEFA have a domestic broadcast contract. 
• 47% of current league broadcasting contracts are worth over €100k (compared to 9% of previous contracts).
• 76% of the leagues who currently broadcast games have increased the number of matches broadcast since 2017/18.
• More than a third (38%) of leagues have a title sponsor.
• Over half (56%) of integrated clubs have bundled sponsorship deals covering both the men’s team and the women’s team.

UEFA says

“Involvement at this pivotal stage will provide clear benefits to the [women’s] game not only on the field but also commercially, as well as providing leagues, clubs and partners with a chance to be changemakers contributing to a positive shift in football and wider society.” 

Sourced from UEFA, Financial Times

Back to school spending is slow this year, but still a priority

Parents with school-aged children are spending for the upcoming school year at a slower rate than last year, but still expect to spend a significant amount despite inflationary concerns, according to a recent report by market research firm Ipsos.

Why it matters

Marketers should note that parents are coming into the 2022 school year with different concerns than last year: though COVID-19 is still present, other issues, such as school safety, and inflation, are taking precedence. Despite this, spending is up, albeit at a slower pace.

Takeaways

• Only 34% of parents with school-aged children have started back-to-school spending this year, compared to 42% percent last year.
• But the expected volume of spending remains high; parents plan to spend an average of $864 on back-to-school items this year, $15 more than last year’s average of $879, and $168 more than 2019.
• College back-to-school spending remains consistent; parents of college-aged students expect to spend $1,200, the same as in 2021.
• Expectations amidst the COVID-19 pandemic are relatively positive: 74% of parents surveyed said they felt that “the 2022-23 school year will go smoothly, without major COVID interruptions”.
• Further, a majority of parents prefer in-person learning experiences, with 65% of women and 50% of men reporting a desire for students to learn in an entirely in-class environment.
• Parents with concerns about in-person learning reported a higher concern over school safety than COVID-19, with 56% of parents reporting concerns for student safety. In addition, women reported a higher level of concern for school safety than men; 63% of women, vs 52% of men, cited this issue as top-of-mind.
• Sixty percent of parents surveyed said they would not let inflation affect their back-to-school spending.

The big idea

Marketers looking to leverage the back-to-school wave shouldn’t be deterred by inflation, as parents are still expecting to spend this year on school supplies and extracurriculars.

Sourced from Ipsos

Walmart: Advertising burns bright in a complex environment

When a retailer is as large as Walmart, its situation can tell you a lot about what is going on: with inflation at a 40-year high, sales are up, margins are down, the profile of buyer is shifting, and the retailer looks to new sources of growth – here’s what we know.  

Why it matters

Not only is Walmart a bellwether of the broader US economy, and therefore an indication of how people are reacting to phenomena like inflation, it is also a leader in high-margin brand expansions as it plays a ‘flywheel’ game similar to Amazon’s.

Key numbers

• Sales are up 6.5% year-on-year, but operating profit is still expected to be down between nine and 11% (a slight improvement on July’s expectation of a 13% profit decrease).
• More mid- and higher-income shoppers are using Walmart in light of squeezed household finances. The retailer attributes the majority of its market share gains to shoppers earning more than $100,000 a year.
• E-commerce continued to grow 12% over the quarter. Walmart now takes 55% of the US online grocery market.

Across the news

Speaking on an earnings call this week, Walmart executives noted the “flywheel strategy” that saw the retailer make headlines with the news that it would include Paramount+, a streaming service, as an additional benefit to its Walmart Plus loyalty program.

Advertising grows beyond the company average

Walmart’s global advertising business grew “nearly 30% in Q2” explained CFO John David Rainey in the call with investors.

While it remains a small part of a colossal total pie, the shift is part of a longer strategy to find more revenue from high-margin products and services that “result in more durable earning streams as they scale,” Rainey added.

Walmart’s ad offer is compelling to a growing number of advertisers, the number who now advertise through Walmart Connect increasing 121% in the last year.

This is a major area of focus. In June, Walmart explained how its storefront brings in 150m weekly visits, and expanded on its trials of shoppable TV ads

It is also a business that is already more global than the physical retail operation, given its possibilities in Mexico and in the huge Indian market, where Walmart is the majority owner of Flipkart, a major e-commerce company.

“Improvements to search and our large first-party shopper data have led to performance improvements for our advertisers, both year over year and sequentially,” said Doug McMillon, chief executive.

Sourced from Motley Fool, WARC,

Three principles for activating pragmatic purpose

Having a purpose isn’t enough for many sectors, it’s now about what you do with it – and that creates a need for pragmatism when planning purpose: We Are Rival’s DuBose Cole lays out a model for positive brand action. 

Why it matters

These days it seems like every brand wants to have a purpose, but rather than instantly jumping on the bandwagon, measured action and a realistic long term plan is advised.

Key takeaways

• Be realistic about what you can achieve. Adopt a pragmatic approach to purpose by aiming to outperform the ‘moral average’ in your sector. This allows a brand to understand where the ‘floor’ is for business impact.
• Plan an authentic purpose that is reflected in your product. An integrated product / purpose story helps to wrap product benefits and features in additional value, elevating their importance and value. Purpose integration multiplies value in and out of an organisation, as it provides a north star for product development and a goal for employees to push towards.
• Incremental brand action can help businesses build towards the best way to activate a brand purpose. Establish initial actions and developing further towards where impact or consumer engagement is being created can help break down the complexity of purpose into clear steps and tests.

Key quote

“Change and sustained impact come from a series of actions, not one off gestures or announcements – and this requires building a realistic plan for the long term. Brands that set out to become activists on day one risk creating a negative, not positive impact – feeding into cynicism and disbelief that business can’t be a force for good amongst a worried consumer base” – DuBose Cole, Co-Founder & Managing Partner, We Are Rival.

Niche sports boom in China

From sailing and paddleboarding to land-surfing and frisbee, China is experiencing something of a mini-boom in previously niche sports and leisure activities.

What’s happening 

The pandemic and lockdowns have led to a renewed focus on wellbeing and health, particularly in an outdoor context. Social media has helped grow interest in new outdoor sports and leisure pursuits – and those with relatively low costs for entry have particularly benefited. In addition, some variety TV shows have picked up on novel sports as a way of attracting viewers. Marketers need to consider how they might tap into these trends.

Takeaways 

The Global Times highlights several developments:

• Sales of imported skateboard categories on Tmall Global have increased by more than 100% year-on-year since January.
• One Beijing-based land-surfing club reports a 40% year on year surge in new members in July alone; a leading brand suggests the land-surfing market could grow tenfold in 2022.
• More than 200 universities have frisbee societies; sales of frisbee and associated products in 2021 exceeded Y 55m ($8.1m).
• Feizhu, Alibaba Group's online travel booking platform, reported a 13x increase in bookings for hiking and climbing last year. 
• Around 50 coastal cities have launched sailing clubs; clubs are also being established at inland lakes. 

Key quote

“Not all popular sports on social media will develop. There will be fierce competition among emerging sports. The winner should have the ability to guarantee industrial supply chains, and effectively control the operating costs and marketing capabilities of enterprises, and the ability to respond to force majeure such as the epidemic” – Chen Jia, independent analyst.

Sourced from Global Times

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