TV Ad Prices Set to Rise Over Ten Percent Next Year

Tim Cross 07 December, 2021 

Over the past year we’ve seen a return to form for the TV advertising market. Traditional TV ad revenues, once stagnant, are now rising again – driven by a mix of broadcaster innovation, interest in TV from digital native brands, and a pandemic-led focus on brand building.

This growth is leading to rapid inflation in traditional linear TV ad prices. This phenomenon isn’t just caused by demand. With more viewers moving away from traditional TV, supply is falling, spurring price rises.

Publicis-owned media agency Zenith predicts that next year, the cost of TV advertising will increase by 11 percent. This is far bigger than predicted inflation in digital display (three percent), radio (two percent) and out-of-home (four percent).

But Zenith’s figures suggest that despite the high inflation, TV ad revenue growth will be somewhat stinted after next year as the higher costs of TV advertising will lead advertisers to reallocate spend elsewhere. In its latest Advertising Expenditure Report, Zenith forecasts that total global linear TV ad spend will grow from $171 billion in 2021 to $178 billion in 2024.

Social will overtake traditional TV next year… or will it?

And while growth for traditional TV is expected to be modest, Zenith forecasts that digital channels’ growth will continue at speed, being the main driver of a predicted 9.1 percent growth in total ad spend next year.

One notable stat is that social media ad spend is predicted to surpass TV for the first time next year. Social media is expected by Zenith to be the fastest growing channel in 2022 at 14.8 percent growth, with total revenues reaching $177 billion. Zenith says a mix of commercial innovation, and the success of new entrants – namely TikTok – will drive this sustained growth.

But there’s still good news for TV. Zenith forecasts that online video, which includes CTV streaming services and advanced TV advertising, will be the second fastest growing channel next year, at 14.0 percent growth.

Given that advanced advertising and CTV services are two of the biggest areas of innovation for traditional broadcasters, it’s unsurprising that growth in these areas is much stronger than for traditional linear TV. And while social may be about to overtake traditional linear TV advertising, TV advertising as a whole will remain comfortably ahead of social.

Total online video ad spend is predicted by Zenith to rise from $62 billion this year to $91 billion in 2024 – where it will be more than half the size of traditional TV for the first time. This means that online video growth over this period (47 percent) will substantially outpace growth in social (29 percent).

Retail media boom set to continue

Another big takeaway from Zenith’s forecast is that the ongoing boom in retail media is set to continue. Total ad spend on retailer media is expected to see even stronger growth than online video, rising from $77 billion this year to $143 billion in 2024.

Zenith says that a lot of this spend will represent incremental growth. Budgets which would once have been allocated towards in-store promotions and placements within bricks-and-mortar shops will now be spent on ecommerce advertising instead. And growth could be even more significant than expected. Zenith’s forecast doesn’t account for the new Omicron variant of the coronavirus, but if the new variant causes renewed lockdowns, the shift towards ecommerce could be even more pronounced.


About the Author:

Tim Cross is Assistant Editor at VideoWeek.
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