Media Inflation Outpaces Economic Growth, Finds Initiative

It is television, which for the last few years has seen significant deflation, that will bounce back to show the strongest inflation during 2004. According to figures from Initiative Media, even weak countries like the UK and Germany will show a rise in TV costs per thousand (CPTs) this year.

This strong media market is good news for media owners, particularly television companies, which in many areas bore the brunt of the recent advertising collapse.

Television’s CPTs will rise by 6.7% as a global average during 2004, according to the forecasts. Within this, inflation will be 6% and 2% in the UK and Germany respectively (this follows declines of 6% and 23% during 2003).

Initiative’s research shows that television is the medium most sensitive to a country’s economic conditions, often providing an exaggerated illustration of GDP growth. Where GDP is high, TV often outperforms; where growth is negative or flat, TV is either in line or underperforms.

The report also shows that cinema – one of the fastest growing media in terms of adspend – is also the most expensive in terms of CPT. The cost of using cinema to reach a thousand people – at $60.80 global average – is more than ten times as high as the cost of television, at $5.80 global average.

Whilst the patterns vary a little across world regions, cinema remains the most costly of the media in every region. This is shown in the table below, where the most and least expensive media for each region are shown in bold.

Cost Per Thousand In Variations (US$)
	Global Average	Oceania	N. America	W. Europe	Asia-Pacific/ME	Latin America	C&E Europe
Cinema	60.80	150.80	34.74	45.91	31.74	111.01	87.82
Internet	19.44	14.11	19.49	25.77	16.95	10.43	12.52
Magazines	10.59	20.06	6.15	9.96	17.62	10.37	8.04
Newspapers	8.85	30.55	5.09	10.96	8.08	17.22	5.80
Radio	7.92	5.05	3.75	3.40	23.46	1.41	1.92
Television	5.80	10.96	7.28	7.11	5.96	3.82	1.15
Outdoor	4.67	18.68	1.51	6.72	5.67	22.20	1.81
Source: Initiative Media, March 2004

In the UK, television’s CPT is set to rise by 5.8% in 2004, reaching $10.15. This is still way below cinema’s $60.13, which is also up 5.0% year on year. Outdoor is the cheapest medium in the UK, with a CPT of $2.65 predicted for this year.

Naturally CPTs are directly affected by supply and demand. Those media with smaller audiences will generally yield a higher CPT. Conversely, an influx of audience to the internet is contributing to a fall in its CPT this year, bringing it more in line with other media after a huge elevation in costs during the boom years.

UK Cost Per Thousand (US$)
	2003	2004	Change (%)
Television (30-sec spot)	9.59	10.15	5.8
terrestrial	10.60	11.47	8.2
satellite/cable	6.74	6.95	3.1
Radio (30-sec spot)	4.04	4.17	3.2
Newspapers (mono)	7.00	6.92	-1.1
Magazines (colour page)	5.46	5.51	0.9
Outdoor (typical roadside)	2.57	2.65	3.1
Cinema (30-sec spot)	57.26	60.13	5.0
Internet	29.80	29.80	0.0
Source: Initiative Media, March 2004