Study Finds Gaps In Ad Spending Vs. Consumer Consumption Worldwide, U.S.

by Joe Mandese , October 21, 2021

In a report that is bound to stir controversy and debate around a perennial Madison Avenue question -- what's the appropriate relationship between ad budgets and consumer media consumption shares Ascential Plc's WARC (Worldwide Advertising Research Center) and GWI (Global Web Index) have released findings of a global study of consumers purporting to show the ad spending gaps across media, as well as international markets.

The study shows what previous analyses going back to venture capitalist Mary Meeker's infamous presentations have shown: that high-demand media such as TV garner far greater shares of ad spending relative to lower-demand media such as radio/audio.

The differentials, many industry experts have argued, don't take into account the inherent supply-and-demand dynamics across each medium, which have more to do with communications value, advertising impact and effectiveness, as well as obviously supply overabundance issues.

"The purpose of this report is to assists clients in identifying the discrepancies between daily media consumption and advertiser spend, in order to better recognize opportunities for optimization," WARC analysts write in the introduction to the report.

According to WARC's assessment, the study which is based on a survey of 715,000 consumers across 100 countries conducted by GWI, an over-weighted medium like social media would need to "reduce by $94.3 billion in order to mirror global consumption levels next year, while the investment gap is $86.9 billion for linear TV."

The report also finds that, as of the first quarter of 2021, social media "now attracts more investment from advertisers than linear TV for the first time, however both media draw far more of advertising budgets than the average consumer spends with these channels each day."

As dramatic as social media's overweighting is worldwide, the WARC analysis shows it is significantly heavier in the U.S., according to a comparison between it and the worldwide indexes it developed (see below).

In fact, social media is the only ad medium that has a more pronounced upward gap in ad spending when compared with the global average.

4 comments about "Study Finds Gaps In Ad Spending Vs. Consumer Consumption Worldwide, U.S.".

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Jack Wakshlag from Media Strategy, Research & Analytics, October 21, 2021 at 10:28 a.m.
When will we learn that surveys of media exposure are poor indicators of media usage and time spent. This has been demonstrated conclusively for decades with linear tv time spent among the metrics most understated by surveys. This study is an embarrassment to WARC and its members.
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Ed Papazian from Media Dynamics Inc, October 21, 2021 at 10:49 a.m.

I have never seen any advertiser CMO or otherwise ask about the share of media time for each medium and whether they should "follow the eyeballs"---or "ear lobes"---- in their media spending. That's not the way that media spend allocations are determined and, frankly, in this case that's a sign of some intelligence---though most media spend decisions are made arbitrarily ---not based on a serious evaluation of cross platform audience data---which is not so smart. I agree with Jack. This is just nonsense---as has been demonstrated time and time again in traditional media. For example, when magazines were garnering 20% of national ad revenues, their time spent share was about 2-3%. And when radio was garnering only 6-7% of national ad dollars its share of time spent was 25-30%. How come?Or does time spent only apply to TV?

Jack Wakshlag from Media Strategy, Research & Analytics replied, October 21, 2021 at 12:17 p.m.

Ed, I agree that spent is only part of what should be looked at, at least it is a data driven start. As you note, most of these decisions today are arbitrary. Is that better?

Ed Papazian from Media Dynamics Inc, October 21, 2021 at 1:11 p.m.

Jack, I fought arbitrary media mix decisions all my life ---and lost just about every time. I think that these days it's almost criminal negligence on the part of many agency client CMOs for giving media the cold shoulder---but they havent changed. No matter what they say in public gatherings too many CMOs think that brand positioning strategies and "creative" are the whole ball game and media is just a boring, buy as many "targeted" eyeballs as possiblefunction---at the lowest cost. There are exceptions---like many sports, news and TV special buys--but here,too, its the association with the program environment----not the CPMs or demos---- that justifies the investment.

While some of these decisions may be the right ones, without evaluating alternatives, these advertisers will never know if they could have spent their money more effectively---if they even care. In days past, new ideas like "addressable TV" and related ways to improve targeting would have been tested---but, sadly, these days even that's a hard sell---when it shouldn't be.