Industry Reaction | What’s behind the disconnect between media buyers and marketers on TV inflation?

Television inflation is on the rise globally, according to a report published by Warc earlier this month.

In the UK alone, average non-broadcast TV CPM was up by 19% to £9 this year, compared to last year’s £7.50.

During the cost of living crisis, increased prices may seem like a daunting prospect, but when interviewed by Campaign at the time, marketers and media planners and buyers had polar opposite views in reaction to the report.

Mark Given, chief marketing officer at Sainsbury’s, described the inflation of linear TV prices as “eye-watering”.

But media planners and buyers resolutely stood by the power of television.

Gemma Major, joint head of UK AV at Mediacom, said that television delivered “beyond other media” in terms of return-on-investment and was a “bedrock” in media plans.

Campaign’s reporting unearthed a disconnect between marketers and media buyers, and it raised the question: why do these two groups, who frequently work together, think so differently?

Campaign took the question to other members of adland.

Clare Chapman

Chief executive, Carat

It does appear that brand spokespeople have been more vocal about their discomfort with inflationary TV pricing than their agency partners, but this does not a disconnect make. Certainly, this is not our experience.

I believe the variance in tone is more a case of clients feeling confident to robustly share their displeasure, while agency folk prefer to take a more diplomatic stance between the two sets of partners.

At Carat we are united in concern with our clients over inflationary pricing, but this is just one of the many dynamics of an ever-changing media landscape.

As with all previous and ongoing challenges to media effectiveness, we continue to work together with our clients and media partners to adapt, evolve and reimagine holistic solutions for sustainable growth.

Bobi Carley

Head of media, ISBA

Mitigating TV inflation is now a constant issue for brands, which means flexing, changing and facing into serious challenges. Just as in our own lives, where we have soaring prices for petrol and other goods, we are all having to make new decisions.

I think sometimes when we talk about these problems in the bubble of our media industry we forget where the money comes from. Brands have to pay for advertising and demonstrate returns, agencies are rewarded when media money is spent.

Marketing budgets are subject to a double whammy: firstly, their business impact comes under ever more intense scrutiny, meaning marketeers are constantly going into battle to prove the effectiveness of their day job; add to that inflation and justifying increasing prices for declining audiences [and it] makes these conversations decidedly more difficult.

Sophisticated advertisers are committed to supporting their brands and understand the importance of brand-building in an economic downturn but TV inflation, with a combination of new money coming to the market and reduced effective reach, concerns all.

These are three of my recent observations:

  • Brands are concerned about the vicious cycle of TV inflation, and the subject gets raised in every meeting. Brands don’t raise the same concerns about online inflation.
  • Never (understandably) in my three years at ISBA have I had so much incoming mail on measuring effectiveness, with brands re-examining how they can make every penny count
  • Brands love linear TV, and they need it. One brand recently said to me that "if TV wasn’t invented, we would need to invent it". Given a choice, they wouldn’t need alternatives - but increased pricing and reductions in mass reach are taking that choice away.

Simon Davis

Chief executive, Walk-In Media

If you want to know what’s going on in the TV market, don’t ask a network TV buyer! Their job is to deliver their agency deals, and since these involve volume commitments, they want clients to spend more on TV.

They are incentivised to talk the market up, and inflation is actually a useful lever for them to extract more money for TV. And with most price auditing being relative, rather than tied to absolute pricing, inflation doesn’t impact upon any price guarantees.

It generally falls to planners to tell their clients that they will need to spend more to get the same for their TV campaigns due to inflation. These are difficult conversations, which planners often manage by coming armed with Thinkbox econometric studies showing the continued effectiveness of TV, and stats from their buyers showing that pricing is still similar to 2019.

None of this helps the brand-side marketers tasked with delivering actual commercial outcomes, which rely on hard, linear metrics like cost-per-cover point and sales per rating.

When the TV market inflates, the network agency buying model is more than disconnected from the client need... it actively works against it.

Mihir Haria-Shah

Head of media, Anything is Possible

TV trading is complicated and the onus is on agencies to educate our clients, especially those new to TV, on how it works. This means explaining why we are experiencing the current inflation - just like with the huge market deflation we saw at the start of the pandemic.

Smart marketers understand the value exchange in spending on TV for delivering against business objectives. All evidence still suggests that TV is the most effective media at doing this.

Ultimately, it is very difficult to super-scale your brand without getting on TV. But doing that if you have a background in digital can be daunting. Helping clients dig into the data to model out the impact of TV investment is so important - and can be transformative in itself.

Zoe Harris

Chief marketing officer, On the Beach

The report shines a light on the complacency that can exist between agencies and broadcasters, afraid to challenge the status quo. Frankly, a number of buying rules are still bad ones that are not fit for purpose in a multimedia environment (such as AB deadlines, penalties for making changes, etc).

Unless both sides really get their heads together, the growing murmurs from clients will become an accelerated desire to find their own solution.

This is the perfect opportunity for media agencies and groups to show their value, through thinking, relationships and the muscle they have from our collective budgets, and remind clients why media agencies are critical parts of our marketing ecosystem.

Nicola Teague

Head of AV planning, The7stars

We can’t deny that the cost of TV (alongside most other media) is increasing. We saw high levels of inflation in H1 this year, with large increases in revenue compared to a lockdown-affected base in H1 2021.

I think the disconnect is quite often the result of a lack of context, which is why it’s so important that agencies keep clients regularly informed about market conditions (and vice versa with marketers keeping agencies informed on their business challenges).

We know, for example, that H2 isn’t seeing the levels of inflation that H1 did. All broadcasters have really exciting programming slates lined up, alongside the World Cup, giving TV in Q4 the potential to deliver the highest reach we’ve seen in years.

If you couple this with the launch of ITVX, and the opportunities on CTV and YouTube, there’s plenty of opportunity to ensure TV is still delivering scale, value and results for clients.

Chris Denman

Joint head of UK AV, Mediacom

MediacomTV has continued to go from strength to strength over the last 24 months, recovering from the pandemic with record demand from advertisers in 2021 and continued growth forecast for this year. This clearly demonstrates that advertisers have continued belief in the role TV has to play across their campaigns driven by the fact it is still unrivalled in its ability to provide mass exposure in a brand safe environment. With a strong Q4 schedule on the horizon, demand from viewers and advertisers alike looks set to continue.

Simon Bevan

Chief investment officer, Havas Media UK

Fundamentally, the greatest challenge the industry faces is the volatility of linear CPTs which has been exacerbated by shorter booking deadlines, increased advertiser demand for the channel and the migration of audiences away from linear viewing to on-demand. Nevertheless, TV and its evolving ecosystem still offers fantastic value for money and that’s why there’s ongoing demand from advertisers for TV in media plans despite inflation. Advertisers might also be encouraged by the early signs that price stability is returning to the market.

That said, TV like any channel should remain under constant review and that remains the case whether there’s inflation or not. The smart choice is to look beyond short-term pressures onto the bigger picture of brand performance and what media experience is being delivered for consumers over the long-term. When viewed like that, TV might not be any less attractive in your media mix than it was three years ago, nor against other formats that have remained stable or are cheaper today.

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