TV bears the brunt of rampant media inflation as advertising costs jump 31.2%
Media inflation is hitting television hard, with advertising costs increasing by 31.2% from pre-pandemic levels – the biggest jump in two decades.
Media inflation is sending TV advertising costs soaring
Compiled by Warc, the bi-monthly Global Advertising Trends analysis found no let-up in surging global TV media costs, with the sector up 9.9% year-on-year in 2022 alone.
The closely-watched cost per thousand (CPM) metric now stands at $20.01 globally, but this figure conspires to mask significant regional disparities, chief among them the US, which will hit $73.14 this year – a 40% premium on 2019 – as the market accelerates deeper into unaffordability. By contrast, cooler heads prevail in China and the UK with respective CPM values of $3.09 and $10.56, and Australia standing somewhere in the middle at $34.69.
The marketing intelligence report notes the heightened impact of ever-rising prices on the food category especially, with advertisers suffering an 18% drop in impressions between 2019 and 2022 for every dollar spent.
Alex Brownsell, head of content at Warc Media, said: “As linear TV’s share of total media consumption declines, particularly among younger audiences, brands are looking elsewhere for incremental reach. However, the efficiency of delivering reach via non-TV channels is being threatened by inflation across the media ecosystem.”
While TV takes the cake for spiraling prices, it is far from alone, with digital media costs also rising fast as television advertisers look elsewhere for more cost-effective channels. This has seen paid social CPMs rise by 33% between 2019 and 2021.
These fluctuations present often-overlooked categories such as radio in a more favorable light. In Australia, for instance, radio CPM media costs have fallen from $6.22 in 2019 to $5.93 in 2022, mirroring a similar trend in the UK, where costs have dropped from $2.48 to $2.39. Out-of-home (OOH) is emerging as another attractive proposition for bargain hunters, with outdoor ad prices in the UK now 3.1% lower than pre-Covid times. This trend is even more pronounced in the US, where the OOH market is now 5.8% more affordable than it was in 2019.
Brownsell added: “As the global economy teeters on the brink of an inflationary recession, media costs may experience further volatility. Nonetheless, non-video channels are worth considering if they are right for the audience.”
Rising costs have informed a gloomy prognosis for UK ad spend, with the Advertising Association (AA) and Warc predicting stagnation in 2022 before outright contraction sets in the year after.