There is substantial evidence from the US of an increased demand by advertisers for media inventory, a trend which could lead to the return of media inflation, according to communications consultancy Media Audits.
Strong demand in the network spot television markets in the States is leading commentators to predict cost inflation as high as double digits for the next upfront trading session. However, in Europe deflation appears to be more likely in 2003, as weaker demand still prevails in many markets.
European trading conditions are generally weaker than the US and cost inflation is less likely to occur this year. Media Audits says that television prices paid for the first six months would indicate an average 1% cost deflation across Europe in 2003, although there are significant variations from country to country.
UK sees deflation In the UK there has been no sign of increased advertising revenues, but audiences to commercial TV have risen in the first half, according to the group. This has resulted in a decline in costs per thousand (CPT) of between 2% and 5%, depending on the audience demographic.
Viewing figures from BARB show that average weekly viewing time to total TV rose by 6.2% year on year during the first six months of 2003.
Across the whole of the year, Media Audits is forecasting that overall UK advertising will see a 2% deflation in CPTs.
Rest of Europe is mixed The French TV market has experienced some inflation, with expenditure running 4% higher than in 2002 during H1 2003, but with no corresponding increase in audience levels. Some audience categories have risen more steeply than others; Housewives with Children was up 7%, whilst Men rose just 2%.
Continued tough economic conditions in Germany are creating a weak demand for television airtime. Ratecard spend has fallen by 2% year on year, whilst discounts received by advertisers have increased by 2% to 3%, according to Media Audits. This has lead to a 4% deflation so far and this is likely to be the full-year outcome.
“The continuing cost-consciousness of major advertisers, who increasingly look at communications expenditure as a controllable expense, looks to limit the up-side for media inflation across 2003/4,” says the report.
For an historical analysis of the media inflation in the UK advertising industry, click Outdoor Media Inflation Outstrips Other Sectors.
