Deflation Data Bursts Media's Bubble: Reveals Average Ad Costs Declining For Online Display, TV Nets

At a time when the value of ad-supported media should be accelerating, as demand from advertisers coming out of the recession builds, some of the biggest and highest profile national media options continue to lag. That's the finding of an analysis of the past six quarters of media cost data compiled by syndicated researcher SQAD for MediaDailyNews. The data, which benchmarked the costs of major media during the second quarter of 2009, near the height of the Great Recession, shows that ad prices have firmed up considerably for local media such as spot TV and spot radio, but have actually deteriorated for national media options, especially online publishers.

The data, which are derived from SQAD's reports for individual media, which are based on actual transaction data supplied directly by advertisers and agencies, found that online display ad costs have fallen 13 index points in the third quarter of 2010 from the second quarter of 2009, when they were benchmarked at an index of 100.

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SQAD's analysts did not speculate on the reason for the declines, but they correspond to the rampant rise of display advertising networks, real-time bidding exchanges, and so-called demand-side platforms that have driven some advertising budgets away from publishers' premium advertising sales toward secondary markets where similar inventory can be bought for a fraction of the price.

But that doesn't' explain why the costs of national TV media, especially the major broadcast networks, as well as cable TV networks, are also languishing.

Ad prices for the major broadcast networks have also fallen 13 index points from their second quarter 2009 benchmark, while cable network ad prices have declined four index points during the same period.

Whatever the cause, the data indicate that while total advertising revenues continue to improve, significant advertising price deflation appears to be occurring across the major national media. Four SQAD databases were used to analyze the changes from baseline Q2 2009 through Q3

MediaSQAD SourceQ2,2009Q3, 2009Q4, 2009Q1, 2010Q2, 2010Q3 2010
Internet Display AdsWebCosts10098103999587
Spot TVSpot TV10010110793107109
Spot RadioSpot Radio1009810096101103
National BroadcastNetCosts10086898510387
National CableNetCosts1008697779896

Source:2010 WebCosts Top 8 categories used: Search Engines/Portals & Communities, Entertainment, Auto, News/Information, Corporate Infor., Finance/Insurance/Investment, Family & Lifestyles, Home & Fashion Spot Radio A18+ Mon-Sun Avg Spot TV A18+ Mon-Sun 6AM-2AM NetCosts A18-49 Total Day All numbers are based on scale Q2, 2009 = 100.
1 comment about "Deflation Data Bursts Media's Bubble: Reveals Average Ad Costs Declining For Online Display, TV Nets".
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  1. Paul Benjou from The Center for Media Management Strategies, November 11, 2010 at 8:57 a.m.

    The supply / demand side of the equation would account for the variances. Spot TV prices jumped for marketers as inventory was swallowed up by political spending.

    The dynamics of the web, on the other hand, are being forced by DSPs where ad networks and long tail publishers are dumping inventory into them. Witness the cutbacks in sales reps at the ad exchanges.

    The exception to this is the top tier publishers / portals that are holding up better than the SQAD averages imply.

    Paul Benjou

    Ad Blog: www.MyOpenKimono.com

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