What the past decade tells us about our uncertain future
While reading the latest year-recap report by our local Nielsen office I couldn’t help but be overwhelmed by the current circumstances. Ultimately making me wonder why a report like this holds any value at all during challenging times such as the ones we’re currently living through. Reviewing a year that already feels to have come to a close ages ago must not mean much when the current outlook is drastically changed. However, after powering through the 105 page long report the overwhelming feeling of existential dread started to slowly lift, being replaced by a feeling of empowerment.
It became apparent to me once more that while change appears radical in the short term it is almost never as radical as it first appeared when viewed in the long term. Change is an omnipresent gradual movement behaving more alike to a glacier than an earthquake. Changing landscapes in the long term, not necessarily the short. Therefore, while 2019 saw some interesting and potentially landscape altering changes the focus should be on trend of the past decade.
Starting off with the overall gross media expenditure trend over the last decade we see an overall increase of 22% to €7.32 billion. This increase is mostly fueled by the addition of online data to Nielsen’s reporting in 2016*. Digital media has matured in a major way over the past decade, quickly growing to be the second largest channel. Second only to TV, which while still dominant has been steadily losing ground to other channels (most notably digital). On a macro scale the drastic increase in digital media might signal further proof of what marketing professor Mark Ritson calls “short-termism”. However, further research based on this data set would be needed to confirm this.
If anything the significant work published by, amongst others, Peter Field, Les Binet and Byron Sharp over the past decade has increasingly shown us the importance of long-term consistency in media activation. It’s interesting therefore to see that only 10% of the total 24.610 advertisers measured by Nielsen have been active throughout the decade. In part this appears to have been driven by online media which have served as an entry point for brands new to advertising with its low barrier cost wise, adding 15.000 advertisers to the total in 2018 and 2019. The addition of online has also significantly driven down the average gross advertising budget per advertiser, further indicating that advertisers that invest solely in online media have a significantly lower average gross advertising budget.
Finally, before diving into some channel specific trends, we can conclude that advertising seasonality has settled to a regular schedule with its biggest peak in Q4 and a smaller but still significant peak in Q2. These seasonality trends are in place regardless of including or excluding online media from the analysis.
Analysis of TV as a channel shows a significant overall increase of gross spend with a decline that appears to have started in 2019. Furthermore, while TV is bought on a GRP basis and not a spot basis there’s been a drastic increase in the total amount of spots, significantly driving down the cost per spot. Indicating the fragmentation that TV has undergone over the past 10 years and the fact that more spots are now needed to reach the same GRP level as before. This trend too appears to shift in 2019, it’s therefore highly interesting to see how this develops in the coming years. It could indicate a rise in cost per spot over the coming years.
Similar to TV, Radio has seen the amount of spots increase drastically (over twofold) while budgets have increased as much. Ultimately driving down the cost per spot to half what it was in 2010. Radio is also bought on a GRP basis, the increase in spots therefore indicates the increased fragmentation of the channel and the need to buy more spots to reach the same GRP level as before.
OOH, Cinema and Online have all shown significant increases in gross budget with online being the biggest grower. While OOH and Cinema have grown significantly, they still only represent a small percentage of the overall gross expenditures. It is, however, worth noting that the increase in gross OOH budgets is largely caused by innovation within the channel: digital out of home. Finally, in line with the increase of online expenditures the more traditional print channels (dailies, magazines, folders) have seen decreases of overall gross budget.
In short, the decade’s worth of data tells us that as online is maturing even further, taking ever more significant chunks of the overall gross budget. TV has shown that it holds up to the ravages of time and while it’s expected to take a less dominant role over the coming years it will remain one of the key channels to reach consumers and therefore one of, if not the, most important channels to build brands. The same applies to Radio. OOH has started to play a more significant role in the media mix with the advent of digital OOH, which is expected to further increase in the coming years.
On a more personal note I find myself looking forward to what the coming decade brings us, even though our view of the future is currently obscured by the corona pandemic.
*although digital media have been included in Nielsen’s reporting it’s worth noting that these costs are a calculated proxy and not actual numbers. Nielsen calculates digital media spend by crawling the top 300 websites in NL, screening for advertisements. If an ad is spotted the budget is then calculated using a formula Nielsen devised. It’s key to note that all Google (search) and Facebook spends are not currently tracked by Nielsen while these are expected to make up most of the overall digital media budget of advertisers.
By Frank Jansen