Tag Archive: media inflation

  1. Key TV trends for marketers at the 2022 Upfronts

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    The US Upfronts recently came to an end, but marketers across the US and globally will continue to buy TV space throughout the year. The rapidly evolving TV landscape makes this challenging – so what do marketers need to bear in mind as they negotiate with TV vendors? In an article for MediaPost, Colin Linggo, ECI’s SVP, Head of Media Investments & Operations, North America, explored some of the key trends impacting the TV industry in 2022.

    This article first appeared in MediaPost on May 12 2022. Discover ECI Media Management’s top 10 insights for the 2022 Upfronts in our whitepaper.

    Another TV Upfront season is upon us — that time of the year when TV networks and media owners are locking up new deal commitments with advertisers and their media agencies for the upcoming 2022/23 programming season. Nothing encapsulates this time like the Masters’ slogan, “A Tradition Unlike Any Other.” An industry tradition that has been radically upended, fueled by post-COVID-19 consumer behaviors, economic volatility, inflationary concerns, industry consolidation and data fragmentation, the 2022 Upfronts are guaranteed to be different and challenging. Our internal estimates indicate that this year’s Upfront market will reach $22.1 billion for the 2022-2023 season compared to $19.9 billion last year  — an increase of 11%. With so much uncertainty, it’s important that marketers are armed with some necessary insights to plan for this critical period.

    The advancement of alternative video audience measurements and new challenges for marketers

    The big picture: Nielsen, the legacy TV measurement currency, is facing stiff headwinds from its competition and media owners. Viewership is no longer linear or siloed on traditional TV sets. Consumers are watching both long-form and short-form content across multiple devices and streaming services. Along with Comscore, iSpot.TV and VideoAmp, including Nielsen, all the key audience and video measurement companies are working at breakneck speed to advance their cross-channel measurement capabilities, reflecting the dynamics of the digital media ecosystem. With all the major media companies investing heavily in their respective streaming services, it’s a top priority for the C-suite to establish an industry “certified” cross-channel/screen measurement system and non-Nielsen currency to integrate and capture all viewership within their portfolio for first-mover advantage. This will allow marketers to obtain conclusive evidence that their advertising investments are contributing to results.  NBCUniversal is partnering with iSpot.TV. The newly formed Warner Bros. Discovery will be partnering with Comscore, VideoAmp and iSpot.TV. While we do not expect monumental shifts with overall negotiation strategies this summer, this year will certainly be a litmus test for all parties. We project that in 2023, 10% to 15% of Upfront deals will be negotiated on non-Nielsen alternative currencies.

    Measurability is everything and is becoming flexible across platforms

    Why it matters: Initiatives such as those mentioned above — including NBCUniversal and iSpot.TV — will allow advertisers to procure media inventory cross-platform, with ad impressions served across all creative assets, including linear TV, connected TV (CTV) and AVOD services. There will be a shift from legacy GRP planning and negotiations to impression-based planning, similar to how digital media is transacted. The measurability of non-linear platforms allows for incremental reach through de-duplication across cross-channel platforms and unified data measurements. However, the deployment of anything new and limited beta testing bring unexpected challenges and complexities. While the benefits of CTV have been well-documented by many sources and reports, ad fraud, overexposure and frequency capping limitations currently permeate the CTV supply chain.

    What they’re saying: Linear TV viewership and ratings continue to deteriorate, with many viewers only tuning into live and on-demand programming. With all traditional broadcast networks offering ad-supported streaming platforms as part of their offerings, such as Disney (Hulu), Paramount Global (Paramount+) and NBCUniversal (Peacock) reach can still be achieved with disciplined planning. Simply relying on TV to drive reach is untenable in today’s fragmented environment. Marketers should pursue a balanced cross-screen planning approach and holistic data strategy for reach and frequency.   In addition, it’s important to note that the audiences targeted on linear TV might not be the same on CTV. Untapped, underserved, underrepresented, high-potential CTV opportunities can be uncovered through effort, timing, research and forward-looking planning.   While all the major media owners and agencies will present bundled cross-platform packages and benefits, remember that legacy siloed operations still exist behind Upfront presentation curtains. These bundled deals are like mutual funds. Deconstruct the Upfront deal components and commitments, and calibrate with agency partners to meticulously evaluate each component. This will ensure the right balance between cost and quality metrics.

    The cost of advertising on TV will increase

    By the numbers: As revealed in our Annual Inflation Report released back in January, even with declining audience viewership, TV inflation in the U.S. is expected to rise this year due to supply and demand. The domestic economy is rapidly returning to normalcy, even with geo-political and energy market volatility. This Upfront cycle will also be heavily impacted by the U.S. midterm elections. The competition for flagship events like the NFL and FIFA World Cup and limited premium inventory will be high, as marketers continue to seek out safe bets for mass reach at the right frequency. Inflation impact will be felt across the marketplace.

    Where it stands: Traditional linear TV inventory is becoming increasingly competitive due to emerging industries. TV advertising spending has historically been dominated by traditional advertisers in consumer products, automotive, telecommunications, food and beverage and pharmaceuticals. In recent months, there have been increased media expenditures from emerging industries with sizable marketing budgets, such as cryptocurrencies, FinTech, gambling and electric vehicles. “Non-traditional” market drivers are paying above industry norms and market rates for high-value, high-demand video inventory. Combined with a lack of premium inventory and ratings erosion, the inventory is becoming increasingly competitive, leading to higher costs. The quality of media-planning strategies will be paramount in today’s marketplace.

    Be smart: When proceeding to the advanced stages of the negotiations with media owners and networks, marketers should ensure that their deal terms and negotiated costs are protected against market factors that the agencies can directly plan, control and influence to offset market inflation with negotiations at the highest agency levels to drive economies of scale. Like a seasoned institutional investor, the agency should provide its clients with the right investment and cost containment strategies to achieve the greatest value. Many Upfront deals will be finalized faster than in previous years, possibly several months earlier than usual. For marketers to lock in prices within internal and/or external benchmarks, Upfront planning cycles will need to be accelerated.

    Between the lines: There is significant value to audience deficiency units (ADUs). Upfront “guarantees” are part of standard deal terms and media owners’ commitments to advertisers and agencies. However, even with the most advanced forecasting models and planning methodologies, under-delivery on performance is to be expected. Shortfalls force TV networks to give clients audience delivery units (ADUs), or “makegoods.” In the simplest terms, ADUs are like store credits. No one likes them or remembers having them. Most, if not all, advertisers will experience under-deliveries from their TV partners. Managing ADUs is tedious and often overlooked by both clients and agencies.   But with careful management, ADUs could potentially be an ancillary benefit during Upfront negotiations — especially with network partners that advertisers consistently spend with year-on-year. These are owed inventory and impressions from a previous period that have not been delivered within the “guaranteed” period. Advertisers should coordinate with their agencies to develop a clear ADU leverage strategy in advance of the negotiation period.

    Independent counsel, impartial insights, integrated strategy

    Heading into Upfront negotiations in such a fragmented and fluid marketing landscape is sure to bring consternation even for the most seasoned marketer.

    Marketers should ensure they have access to independent counsel and impartial insights to inform their negotiation strategy, and by benchmarking rates, setting precise media targets and quality guardrails, all aligned into a cross-channel integrated strategy that will deliver the highest media ROI and transparency.

    Header image: Proxima Studio/Shutterstock

  2. Coronavirus has a dramatic effect on media inflation

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    In just a few short weeks the Covid-19 pandemic has disrupted the human way of life right across the globe. We have been forced to stay at home and, crucially for the advertising industry, our consumption habits have been transformed quite literally overnight. Many brands have been impacted by reduced spending, forcing them in turn to reduce their own advertising budgets; almost all advertisers have revised their 2020 marketing activity in some way.

    This disruption to global media markets has caused a sharp drop in demand and, as a result, a decrease in pricing for most media types, according to ECI Media Management’s special report on the impact of coronavirus on media inflation, produced by our experts. At a global level, all traditional media types will suffer from deflation of varying severity, while Digital Display and Digital Video – which were looking very robust in our original report released at the beginning of the year – are forecast to be only minimally inflationary in 2020. The story is more varied at a regional level: in North America and EMEA, all media including Digital are deflationary, while in APAC and LATAM some media types are showing more resilience. It seems likely that the fact that these regions are at different stages of the pandemic – APAC is seemingly through the worst, while LATAM looks to be at the start of the curve – is affecting inflation.

    Digital: inflationary overall, but deflationary in key markets

    With advertisers shifting spend out of OOH, demand is high for digital, leading to overall inflation for Digital Video and Digital Display, particularly in APAC which is driving global Digital inflation. However, several major markets such as the US, the UK and France are experiencing deflation in digital channels due to the huge inventory increases combined with decreased demand. The use of programmatic blacklists to block terms associated with coronavirus is reducing the price drop for digital channels, although the trend is causing digital publishers to struggle – the IAB is trying to combat this practice.

    The video streaming platforms should be one of the few sectors to benefit from the coronavirus pandemic, with subscriber and viewing figures up significantly. Those platforms with a revenue model based on advertising should see increased demand from advertisers seeking to benefit from that increased viewership, especially in the US.

    TV: consistently deflationary, except in APAC

    TV viewership has perhaps never been higher, with people turning in their droves to TV as a source of information and entertainment. The increased viewership has led to increased supply, particularly as some advertisers have had to pull their spend – and that has led to an overall deflationary trend. This means that there is huge value for those brands who are still active in TV, with much more reach at no extra cost.

    Coronavirus will have a lasting impact

    Coronavirus and the havoc it is wreaking on our economies and our way of life will have a profound and enduring effect on the entire advertising industry. It seems inevitable that, when we do emerge from this crisis, the landscape will have dramatically transformed. Economic uncertainty and a lack of growth will likely see brands continue to exercise caution over their marketing spend: ad spend is likely to decrease, and media inflation will inevitably respond. At ECI Media Management, we will continue to provide forensic analysis and actionable insights so that advertisers are able to successfully navigate this new terrain. Please don’t hesitate to contact us if you would like to discuss your media activity in a post-coronavirus world.

    Read and download the report here.

    Discover our top 10 recommendations for advertisers during the coronavirus pandemic here.

    Image: Cipariss/Shutterstock

  3. ECI Media Management Inflation Report 2020: what’s driving TV inflation?

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    Understanding media inflation is crucial for advertisers

    Advertising is an investment: an investment that organisations make into their future success, to grow their business and secure their future. And those organisations, just like any other investor, must have a thorough understanding of how the market – and their investments – will fluctuate, in order to understand the eventual value delivered.

    ECI Media Management’s Inflation Report offers analysis and context on media inflation

    That’s why we at ECI Media Management we release our annual Inflation Report in Q1 every year, with an update in Q3. Our experts analyse data drawn from our global network of offices, cross-referencing it with industry sources in order to make the most accurate forecasts possible. We provide media inflation predictions for seven media channels – TV, Digital Display, Digital Video, Newspapers, Magazines, OOH and Radio, at a global and regional level as well as for 61 countries across North America, Latin America, Europe, Africa, the Middle East, Asia and Oceania. As media inflation is intrinsically linked to global economies and events, and developing technologies, our reports provide the context that is so critical for brands making important advertising decisions.

    The key finding for 2020: TV and Digital Video inflation set to peak

    Our 2020 inflation report, released earlier this month, revealed the key finding that, while global media inflation in 2020 will remain largely consistent with 2019 figures, video media will experience a significant increase in inflation this year. TV will reach 7.1% and Digital Video will increase to 6.7%.

    Political and sporting drama, and audience fragmentation are behind the rise in TV inflation

    What’s behind this increased inflation? Given the technological and media context, it doesn’t really come as a surprise. Of course, 2020 is set to be a year of sporting and political drama, with the Olympics, the UEFA European Championships and the US presidential election, to name just a few key events taking place at the start of the new decade. Major events of this nature always inflate TV pricing but, more fundamentally, audiences are fragmenting and ad dollars are following tend to consumer eyeballs to digital video, particularly the growing amount of premium content that digital vendors are producing. As a result, TV vendors have fewer viewers, but increase their prices to maintain advertising revenues.

    Is this digital advertising’s moment?

    Despite rising costs, TV remains the best way to deliver mass, quality audiences. Digital inventory is of course plentiful, but it is of varying quality and is susceptible to ad blocking and data privacy laws. The decline of the cookie will exacerbate advertisers’ difficulties with digital advertising, forcing them to rethink how they reach audiences with relevant advertising. We believe that in the medium term this could herald a golden era for digital advertising, with a focus on high quality opportunities such as contextual marketing. In the meantime, TV offers advertisers a brand safe, brand appropriate way to reach quality audiences, build their brands and, with the advent of addressability technology such as Sky’s AdSmart, target specific audiences.

    Actionable insights to navigate the complex media landscape and maximise effectiveness

    It’s imperative that today’s advertisers take advantage of and respond to the changing media and global landscape in order to drive the highest possible value from their investments. In a context of rising media prices, we at ECI Media Management empower our clients to make the right investments by providing forensic analysis of their media activity, and actionable insights so they can successfully navigate the complex digital market and maximise TV effectiveness. The ultimate goal is to drive higher media value, and media-led impact on business performance.

    You can read the ECI Media Management Inflation 2020 report here.

    Contact us if you would like to discuss anything you learn in the report:

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