From groceries to gas, inflation has become a fixture of the U.S. economy. Media is no different and the advertising accounting firms AuditStar and Cortex Media are telling marketers they should expect prices to go up into the year to come. That includes projected increases in radio ad rates, albeit not as large as estimates for how much video rates could jump.
In a new report they project an overall media inflation rate of 6.71% in the U.S. this year with a slightly more modest media inflation rate of 5.06% forecast for 2023.
“Print media will see lower levels of inflation as revenues decrease, while out of home and radio will be able to command somewhat higher pricing increases,” the report says. AuditStar and Cortex Media peg radio’s ad inflation rate at 3.5% this year – or roughly half of what media inflation is overall – with radio rates predicted to rise another 3% in 2023. That is on par with the inflation rate the firms are seeing for social video advertising, while radio’s inflation rates come in significantly below estimates for the increases marketers will face for anything tied to video.
“TV will have the highest levels of inflation in 2022 compared to other media,” the report says, but adds, “Inflation for broadcast and cable TV is expected to slow down but addressable and connected TV will see inflation rates ticking upward in 2023.”
Inflationary pressures on media will be largely driven by growing ad budgets. AuditStar and Cortex Media point to forecasts showing total media spending in the U.S. will likely climb 11% this year to $294.3 billion and expand another five percent next year to $310.1 billion. But how that money is divvied up is changing and that will dictate where pricing pressure is the most severe.
“Online media will capture the overwhelming majority of spending increase, especially online Video, and we can see online media capturing close to 80% of ad spend by 2023,” the report says. “In contrast, we expect TV upfront spending to be flat versus 2022 with real declines in linear spend and more dollars going towards digital video channels either through fluidity deals or separate buys.”
London-based AuditStar and Coral Gables, FL-based Cortex Media worked with a variety of sources to craft estimates that cover markets around the globe. They included the World Federation of Advertisers, the Interactive Advertising Bureau and ad giants like Magna, GroupM and Zenith Media.
The report shows U.S. radio’s 3.5% inflation rate this year is middle of the pack, with countries like the U.K. (+7.5%), Brazil (+6.5%) and Columbia (+6.1%) experiencing higher rates of inflation when it comes to radio advertising.
In North America, the report says Canadian radio is lower than the U.S. at 2.5% while Mexican radio is higher at 4.8%. AuditStar and Cortex Media predict U.S. radio will once again sit between the two in the coming year.