Ad-supported media's share of total consumer time spent with media fell to its lowest point ever in 2021, and is projected to continue falling over the next several years, even as spending by advertisers continues to rise.
That paradox, which is based on a MediaPost analysis of data from PQ Media's just-released consumer media usage forecast, implies a pronounced rise in ad cost inflation through 2025.
The new report -- part of a regular series of annual tracking studies produced by PQ -- estimates ad-supported media's share of consumer time fell to 46.6% in the U.S. in 2021, and to 54.6% worldwide.
Thanks to a rise in total time spent with media due to the COVID-19 pandemic in both 2020 and 2021, total time with ad-supported media actually grew, even as its share dipped -- but the effect has been relatively moderate and not nearly enough to impact the potential inflation of more ad dollars chasing fewer available minutes of advertising exposure.
In the U.S., for example, consumer time spent with ad-supported media rose just 0.01% in 2021, while total advertising and marketing spending jumped 8.7%, according to PQ's estimates.
Worldwide, consumer time spent with ad-supported media rose 0.04% in 2021, but total advertising and marketing spending rose 7.2%.
"Historically, there has always been a disconnect between advertising and marketing spending vs. consumer media usage during recession and recovery periods," PQ CEO Patrick Quinn explains, noting: "When a recession first hits, advertising and marketing growth will typically decelerate, while media usage increases, because consumers tend to use media as a catharsis during difficult economic periods.
"Conversely, when an economic recovering begins, advertising and marketing spending will outperform GDP, while media usage tends to decelerate, because consumers have less idle time as they go back o work and such."
Quinn added that between 2020 and 2021 "the media usage gain was stronger than usual" due to stay-at-home protocols during the pandemic, while advertising and marketing declines were "steeper than usual."
The result, he said, was a corresponding deceleration of consumer time spent with media and an acceleration of ad spending.
While total consumer time spent with media is projected to continue to expand in both the U.S. and worldwide through 2025, ad-supported media's share will continue to erode due to secular, not cyclical shifts in consumer usage of media -- something other analysts and economists have been pointing out, including the Big 3 agency -- GroupM's, IPG Mediabrands', and Zenith's -- top forecasters during their year-end outlooks last month.
More recently, GroupM Global President of Business Intelligence Brian Wieser shared new consumer research with MediaPost indicating there also is increasing intolerance for consumers to accept advertising as a means of defraying the costs of premium subscription streaming services, which GroupM also projects will increasingly account for a greater share of total time spent watching video, while traditional ad-supported TV is expected to decline.
Joe, the amount of time adults spend with "ad-supported" media is around 10 hours per day---if you believe the "audience" surveys which are based mainly on device usage----and this figure has not changed significantly, though the way the time is distributed between "platforms"---"linear TV" vs streaming, for example---will vary. The key variables are not so much small changes in total time allocations but altered ad clutter ratios and CPMs. At present, CTV and AVOD feature considerably fewer commercials per hour than "linear TV" ---which acts to reduce the number of available "TV" GRPs somewhat, though higher CTV/AVOD CPMs limit major declines in total ad spend for "TV". What I expect to see is a continued and significant pattern of CPM hikes for all forms of "TV"---including "linear TV"---- and an increase in ad clutter where it is now fairly modest ----which will generate more GRPs at higher CPMs to sell to always eager buyers.
@Ed Papazian: That must be Media Dynamics' or another source's estimates. It's not what PQ Media reports. According to PQ, the average American currently spends 10.67 hours daily using media, and only 46.6% of it is with ad-supported media. Globally, the figure is an average of 7.77 hours daily, with only 54.6% of it spent with ad-supported media.
Joe, if "linear TV accounts for , say, 3.0-3.5 hours of an adults time per day in the U.S. and CTV plus ad-supported streaming adds another hour, we are up to almost 4.5 hours of ad supported time per day just for "TV". Add non -streaming digital video and radio/audio with another 2+ hours plus about 45 minutes for print media and toss in some time for out-of-home, especially place based media, and you get somewhere between 9-10 hours a day---as I said---If you believe the surveys. You say that PQ contends that the average daily time spent with ad-supported media in the U.S. ---per person---or adult?---is only 5 hours. Yep, you are correct. Our Media Dynamics" estimates are, indeed very different. We also do an interesting analysis in our upcoming report, "Cross Platform Dimensions 2022", which considers the amount of "quality" time---attentive time---that is spent with the media. This reduces the infalted numbers put out by the "audience" researchers considerably. Perhaps, that's what PQ is referring to---attentive time?
@Ed Papazian: You're still not sourcing your data. I'll assume it's either Media Dynamics (which I don't have access to) or Nielsen. Nielsen's last "Total Audience" report estimates the average U.S. adult tuned to three hours and 41 minutes of live and/or time-shifted TV daily, but it doesn't note how much of that includes non-ad-supported TV sources. And those are U.S. estimates. And they are Nielsen's estimates.
I can ask PQ to explain their calculations, but if you ask me, the definition of time-spent with media is somewhat in the eye of the beholder, because the numbers I cite above are "tuning," not necessarily consuming. Various observational studies, telephone coincidentals, etc. have shown they're not necessarily the same thing.
Joe, we use many sources and come up with our own independent estimates---hence we are the source. However, I was not citing specific numbers---just approximations for the purpose of this discussion. So let's take the Nielsen numbers you mentioned----which works out to just about the number I mentioned---3.7 hours of "linear TV" daily. Nieslen also reports that "linear TV" accounts for 72% of all "TV" viewing, hence the total for "TV",counting streaming is slightly more than 5 hours per day. Since PBS normally accounts for only 1% of TV activity and relatively few channels---usually those with tiny audiences ----are ad-free, it's a safe bet that 95-98% of "linear TV" is ad-supported. Add half of streaming as ad -supported---just a guess---- and you get ad supported "TV" at about 4.4 hours a day. And that's just "linear TV" plus streaming. What about all of the other ad-supported media platforms?
@Ed Papazian: Interesting, do you also have estimates for the share of linear TV viewing that goes to pay TV services that do not carry advertising (HBO, Showtime, etc.)? Nielsen doesn't report that. On any given day, as much as 30% of TV usage may be going to sources that Nielsen doesn't attribute a source for.
I don't think you can just subtract public TV (which actually does have some ads in it) and attribute all other viewing to ad-supported TV. There are other sources, but they're generally not reported.
That said, I'm checking with PQ media to see what they have to say.
Sorry, Joe, I don't have those estimates---HBO, Showtime, etc. ---but I doubt that they would add to more than 10%. If that's correct ---perhaps Nielsen could supply their percentage on this----the ad-supported "TV" figure could drop to, say 4 hours per day---which still leaves almost nothing for all of the other media options---per the PQ figures you cited.
Anyone know if this media definition includes tine spent on commerce sites, like Amazon?
@Mike Merna: I believe it includes all media, including the internet and mobile apps, so that would include Amazon and other commerce sites. But I've asked PQ Media if they could follow this thread and respond accordingly.
Ad-supported media are those platforms in which a greater share of revenues is generated by advertising, and conversely consumer-supported are those platforms in which a greater share of the revenues is generated by consumer spending on media. Over the past decade those lines have blurred somewhat, such as newspaper advertising plummeting which circulation has had softer declines, but for an apples-to-apples comparison since 1975, we continue to place most traditional ad-supported media in this category.
As to the digital usage, we only include behaviors that are examine media content. We include the time spent looking at Amazon reviews, as that is similar to looking at Consumer Reports when choosing a product, but we don't include the actual purchasing of products, as e-commerce replaces brick-and-mortar shopping, which was never considered media content.
Joe, thanks for the article. I have been steadfast over the years in staying with ad-supported media. I ask my members in a series of surveys about going to a reduced advertising and a small monthly membership fee or stay free and advertising based. The members clearly stated they wanted to stay free.
With the current inflation levels going higher, my older members have said they couldn't afford a fee for additional entertainment. This might move the needle back to more advertising.
Leo, are you saying that if a medium garners, say 40% of its revenues via advertising and 60% of its revenues via subscriptions or other non-advertising incomes you classify it as consumer- not ad- supported? I just want to make sure I fully understand your response.
Anticipating Leo's reply as a "yes", it seems that the data in the charts is more a reflection of the evolving business plans of the various media than it is of the amount of advertising GRPs that are available and the amount spent to buy them. Obviously, many ad dollars go to consumer-supported media---by the PQ definition----as well as to media where ad revenues constitute the majority of the revenue. I don't know where the basic cable channels stand in this analysis or the broadcast TV networks as, in some cases about half of their incomes are not derived directly from advertising. Regarding AVOD and CTV, here as well, much of the revenue is not ad revenue.
@Ed Papazian - funny, I was going to ask exactly the same thing. I assumed, when I first read the post, that "ad supported media" was anything that carried advertising vs sites and other platforms which had subscription models and no advertising (e.g., Netflix vs. ABC) and at that point I was thinking "so... not much one can do" as well as wondering about the splintering of the audience (because not many pure non-ad-supported media have huge audiences.
But the division quoted above brings a totally different view of the world. So, let's say that you are a subscriber of the New York Times website. If the NYT website makes 60% of its revenues, from subscriptions, then I'm consuming "consumer" media, but, if the sales director does a bang up job and increases advertising revenues so that they now represent 60% of the revenues, I'm consuming "ad supported" media? Yet, I haven't changed!
Seems to me that way further clarification is needed.
Marcello, as I pointed out in one of my posts this kind of anaylsis is really a trending of the changing business plans of the various media. For, example, as TV gets farther away from relying on ad revenues ---it's already happening big time----the percentage of time spent with "ad supported" media--using the definition employed by PQ Media--- will drop to the point where "consumer supported" media account for 75% of the total---maybe more. However, this has little to do with the amount of time that we spend with ads---or the amount of GRPs available to advertisers. As for ad spend, this is a function of more brands entering the marketplace and higher CPMs---the latter being normal inflation.
Sorry for the delay in responding, Ed, but the answer is yes. As to other posts made since your question, I made reference in my first comment that the share of advertising versus consumer spending in particular is not as wide, but for historical comparisons we will continue to use the same breakouts. Will television and newspapers, for example, rely less on advertising, the same could be said for pure-play internet and mobile media, whereby consumer spend for internet and mobile access throurgh AOL and Verizon in the 1990s and 2000s is no longer dominant with the rapid ad growth of Facebook and Google in the 2010s.
Given everything we've read in this thread, and basically away from the "public eye"... why even continue publishing this kind of research? Seems pointless.
Marcello, in fairness this article and the research does make an important point---the changing business plans of the media when it comes to ad revenue as an income source---and this certainly is the case for TV. It would have been clearer if broken out for TV in particular but that depends on how much data PQ Media was willing to supply and how it was interpreted.
@Marcelo Salup: I've been covering research about the advertising and media business for more than 40 years, and personally, I think this is among the most important and insightful that's been published, because it points to some fundamental shifts, including fragmentation, reach, and the shifting economics of consumer media. When you combine it with a variety of ad avoidance technlogies -- from VCRs to ad blockers -- it shows how much harder it is to reach consumers than in the seminal days in which mass marketing and advertising was first evolved.
Like anything MediaPost publishes -- including stories and charts about research -- not everything is for everyone, and readers are free to determine what they want to receive or read. Just like consumers in the broader world of the media marketplace that this research speaks about.
Or readers are welcome to comment on why it's pointless, too.
Joe, regarding how difficult it is to reach consumers now than in the good old days, I agree, but only if advertisers continue to use the old TV playbook from 1965 or 1975---as some, incredibly, still do. Today's consumer is being reached by more media than ever before and most of it carries ads, however, to attain the kinds of reach that you once generated with what is now called "linear TV"---say 85-90%---you must spread out your media buys across many platforms including new ones with different audience metrics and buying/ ad scheduling practices. Some of these offer unique interactive features that should be exploited even if they are not available for the basic "linear TV" portions of the media mix---yet, these extra benefits are also overlooked in a surprising number of cases.