Inflation is Everywhere
It seems everyone is talking about Inflation at the moment and yes we are seeing price increases everywhere…
including in the world of media.
Matt Hill from Thinkbox wrote an excellent piece a few weeks ago looking at UK TV Inflation in the context of the wider economy and real changes over the last decade. Picking up on this we thought it might be useful to look at some Irish Metrics and provide some additional context to the short term inflation spikes we are re seeing in the Irish TV Market.
Short Term Vs Long Term
It is fair to say we are certainly seeing inflation rear its head in the Irish TV Market at the moment. This is however very much a short term shock ,caused in part by the bounce back from Covid, after what has been a very long period of stagnation in the TV Market.
Two factors as we know set the real price of TV – Demand & Supply.
If we go back and compare demand 10 years ago in 2011 with 2021 , TV Spot Revenue figures provided by TAM Ireland suggest demand grew by c. 16.5%
On the supply side of things , comparing Total Adult Commercial Impacts in 2011 with 2021 , we have seen a total decline of just 2.6% ( Source: Nielsen TAM).
That means over the past decade the Adult CPT has moved from €4.94 in 2011 to €5.97 in 2021 , an increase of 19% , averaging less than 2% per year , so hardly an unreasonable change across a 10 year period.
However, as we know the Euro in 2021 is worth less than it was in 2011 so we do need to look at this Adult Price in the context of changing CPI over the past decade. The ECB CPI figures suggest that between 2011 and 2021 , the cumulative change has been c. 13.78%. So when you adjust the €5.97 for CPI / the CPT is adjusted to €5.09 , which means the real change in CPT since 2011 is just 3%.
It is also important to note that inflation has been driven primarily by growth in demand ( i.e. a rise in spend from advertisers) , given that the supply change is less than 3% across the past decade.
It is also worth remembering the deep decline in revenues experienced across the market following the financial crisis in 2008 and how long it has taken for revenues to recover.
The Covid Effect
The Short -Term shocks in inflation we are seeing now have been driven by the polemic shifts in demand and supply over the past 2 years . impacting both advertiser spend patterns and viewing behaviour.
However, we need to look at the longer term to gain real context when looking at the overall price of TV and Market Inflation.
Matt Hill’s article provided additional context by comparing UK Linear TV CPTs with other markets such as the US. Irish Linear TV CPTs have seen considerably less inflation than both the UK & US over the past 10 years and continue to offer excellent value for advertisers here.