Increased Media Costs do not Mean Increased Budgets

One thing you can count on is that the cost of media is increasing year over year. It is all based on supply and demand, however, with increasing costs of doing business, media vehicles are increasing what they charge advertisers to cover their costs, increase their profits and finding alternate revenue sources.

US spending on traditional media (directories, magazines, newspaper, outdoor, radio and television) fell 18.5% due to the recession, according to eMarketer, and projecting 2012 to 2015 traditional media spending to grow only 1% year over year.

Although, it is not all types of media that are showing less involvement, traditional media that is showing less investment (magazine, newspaper, radio). It is interesting to note that television (including network, syndication, spot television, cable) is predicted to increase closer to 3% year to year. That is just in advertising space, it does not include product integration, which is expected to grow as well. Kantar Media has started tracking brand appearances in prime time and late night. It is measured by minutes of duration. According to Kantar Media in 4Q 2010 unscripted shows saw 14:19 minutes of Brand Appearances and 15:06 minutes of network ad messages. Scripted programs saw 4:50 of Brand Appearances and 14:45 minutes of network ad messages. Combined Brand Appearances and network as messages range from 19:35 per hour to 29:25 (32%-48.7%) of the total content time.

Looking at top category spenders, the spending categories remain fairly consistent year to year and in each media vehicle (Auto, medicines, retail, restaurants). Greatest growth in spending remains with technology and communication categories. There is not one specific category driving each media vehicle, but each media vehicle has its top spenders. With television still accounting for 46% of spending, according to Kantar Media, that category has the most impact in overall media spending.

Digital and mobile marketing are the hottest advertising marketplaces right now with upwards of 20% increases in spending. However, this is not increase of advertising spend, but a shift in dollars from traditional (mostly magazine and newspaper) to online and mobile. Online advertising is seeing a minimal to flat year to year in spending, and growth is coming from paid search, up 20% so far in 2011 according to MagnaGlobal.

Projections for 2012 are hard to make, but being a political year and an Olympic year I expect to see increases in media costs, however I predict only about 3% if you get in early. Direct mail will be impacted by the postal regulations especially if Saturday delivery is eliminated.