In an age of ad avoidance, fragmentation of the mass media and new forms of news and entertainment battling for consumers’ attention, the need to spend the marketing budget wisely is greater than ever. The 2005 Global Media Cost & Inflation Report is the latest in the Global Intelligence series from Initiative Futures Worldwide.   This year, the report covers 7 years of data for 6 media in 54 countries, painting a truly global picture of worldwide media costs. 

Ireland, however, witnessed the highest increase in TV costs in Western Europe in 2005, and is now the fifteenth most expensive country in the world for buying TV space, CPTs being 40% above the global average.

 

 According to the report, in 2006, worldwide media costs will rise, for the second year running. 2006 sees all media costs rise ahead of economic inflation for the first time since our report began.  Due to the advertising recession, the annual growth rate for media costs experienced a slowdown during 2001 and 2004; this has now been reversed.Global media inflation is being driven by developing countries in Eastern Europe and Latin America as well as China.  On the other hand, mature economies such as the USA and Western Europe are seeing media inflation grow at much lower levels, comparable with economic inflation. 

Cinema continues to be the most expensive medium globally in terms of the CPT - ‘cost of reaching a thousand people’.  In 2006 Cinema’s lead in the cost rankings will strengthen further still: it is the medium forecast to have the highest global media inflation with an annual growth rate of 9%.  In Ireland, cinema also remains the most expensive media, despite a 10% decline in costs, due primarily to the increasing number of cinema screens and lower cinema admissions in 2005.

Globally, Internet is the second most expensive advertising medium. This is driven by the US, where online media costs are set to rise by 11.4% in 2006. .  Demand is being driven by rapid uptake of broadband enabling new and increasingly engaging formats as well as the medium delivering a high level of accountability.  In Ireland, CPTs for online advertising decreased by almost 17% due to better accountability and higher reach figures, coupled with reduced costs. Prices are expected to rise marginally in 2006.

Until 2004, TV had been in decline or experiencing moderate growth globally, only just exceeding economic inflation.  However in the last two years, TV has staged something of a recovery with an increase of 4.7% in 2005 and costs are expected to rise a further 5.3% in 2006.  Ireland, however, witnessed the highest increase in TV costs in Western Europe in 2005, and is now the fifteenth most expensive country in the world for buying TV space, CPTs being 40% above the global average. According to the report, CPTs are sensitive to economic conditions.  Previous Initiative reports show that TV is the only media that has a strong correlation with GDP.  Therefore, the wealthier the market is, the higher the TV CPT. This is certainly true of Ireland, which has the second highest GDP in the world, after Switzerland. The buoyant economy, coupled with increasing demand for TV space has fuelled this increase.

Newspapers have been experiencing declining readership in the last few years, not least due to the rise of the Internet as a rival news source, resulting in a higher CPT for Newspapers (+3.5% in 2005 and +4.5% in 2006).  Ireland is predominantly a print advertising market, and despite huge discounts, newspapers take over half of all media spend in Ireland. Despite these huge discounts, newspaper cost per thousands in Ireland are 96% above the global average. Increases in rate cards and a reduction in readership meant that costs grew by almost 8% in 2005.

The Irish Times said that the average television cost per thousand in Ireland was $12.73 (€10.83), while the global average was $7.09. A spokeswoman for Initiative said the Irish figure was based on the RTÉ average station prices, from which all other stations based their costs. With newspapers, the Irish average cost per thousand was $18.05, while the global average was just $9.05. This was based on half-page black and white advertisements in the national dailies, and took account of agency discounts and commission.

Magazines CPTs remain third highest in the world, but they saw only marginal increases in 2005 (4.9%).  Prices in 2006 are expected to be flat, with media inflation matching economic inflation (both 4.2%).  This is a consequence of the explosion of magazine titles in many countries, leading to a more competitive marketplace.  In Ireland, magazines are the second most expensive medium. Costs are expected to rise by about 10% in 2006, due to a 2005 IAPI report which indicated that spend on magazines in Ireland has been grossly underestimated, as well as an increasingly cluttered marketplace.

Radio remains Ireland’s most cost effective medium. Radio CPTs in Ireland are 17% below the global average. Irish people listen to more radio than people in any other European country, while rate card costs are relatively low. Due to increasing listenership figures, and stable costs, radio CPTs in Ireland actually decrased by 14% in 2005. Globally, radio costs increased by 5.5%.

Radio advertising in Ireland is 17% below global average because of intense competition.

Outdoor remains the least expensive medium at the global level (US$6.19). Challenges remain concerning its accountability – accurate audience measurement is more scarce than for any other medium.  Outdoor provides advertisers with mass communication, a fact that will become more important as consumers increasingly avoid advertising in other media.  Furthermore, innovations in the medium – such as interactivity – mean that Outdoor is also providing more exciting opportunities than ever before. As this is the first year of the JNOR, outdoor CPTs were not available for Ireland for this report.

Our CPT figures provide the foundation data for a plethora of uses and projects including: everyday planning, ROI, regional budget allocation and ExposureTrack.

Figures are provided by local experts from across our worldwide network who add their own specific knowledge and insight to help us better understand the numbers.  All our figures are realistic estimates of what an advertiser can expect to pay.  Instead of being based on ratecard costs, they include typical discounts and fees to produce a realistic comparison across countries.