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WARC: Ad Allocations For TV And Social Media Far Exceed Consumption.

Advertiser spend on TV and social media is highly inflated in relation to daily consumption, according to a new WARC analysis of advertising spend forecasts for 100 markets worldwide and the results of a survey by GWI of more than 715,000 consumers. The study comes as a bookend to WARC’s earlier finding that audio captures 31% of media consumption but just 9% of ad spend.

The latest findings were published Thursday by WARC, as part of the media and advertising research firm’s new WARC Data Premium suite.

The analysis finds that, as of first quarter 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.”

Social media, for example, is forecast to account for 39.1% of 2022 ad spend among the eight media studied in the report – linear TV, online video, social media, print press, online press, podcasts, broadcast radio and online audio – but has a 21.4% share of daily media consumption. That’s a discrepancy of 17.7 percentage points and is equivalent in value to $94.3 billion.

Social media has accounted for over two hours of daily media consumption since second quarter 2016, per GWI monitoring, and WARC Data Premium’s latest forecasts expect daily social time to reach 2:30 during the second half of next year.

Notably, all demographics measured in the report are set to spend twice as long with social media as they are with online press next year, despite ongoing trust issues – less than one-half of adults say advertising on social media is 'somewhat' or 'very' trustworthy, falling to 28% in China, 19% in the U.S. and just 10% in the UK.

Despite this, one of the largest gaps between social consumption and ad spend can be found in the U.S., where advertiser spend is two times larger than consumption. The ratio is even more lopsided in China (3.3x) and the UK (2.2x).

Linear TV ad spend is twice as large as daily consumption. It is forecast to account for a 31.5% share of advertising spend next year among the eight media studied, compared to a 16.1% share of daily media consumption. WARC says this would equate to an investment gap of $86.9 billion worldwide for 2022.

While linear TV spend is inflated in relation to its consumption, online video is now close to parity after years of underinvestment. Advertisers are forecast to spend $71.9 billion on online video this year, a 13.6% share of the eight media studied, which compares to 12.9% of media consumption, or one hour 37 minutes.

As first reported by Inside Radio, audio is vastly under-utilized by advertisers and its share of ad dollars is grossly out of synch with its share of time spent with media.

In a new audio finding, podcasts are found to be undervalued by $40 billion with the greatest opportunities for advertisers among audiences aged 16–24, middle earners, and those educated until the age of 16.

One in three internet users now listens to a podcast each month, but a cost per thousand (CPM) of $23.55 is higher than even TV. WARC forecasts that U.S. podcast ad spend will grow 24% in 2022 as more advertisers join.

Online press also appears to be another heavy undervalued medium: advertisers would need to spend $58.0 billion on online press ads globally next year to achieve parity with consumption levels. Instead, forecast spend is just $12.8 billion.

James McDonald, Managing Editor of WARC Data, and author of the report, says media investment and consumption are rarely in lockstep with one another. “In some cases, particularly for undervalued audio formats such as podcasts, this presents a good opportunity for canny practitioners to reach audiences with comparatively little competition,” he says. “For industry stalwarts like linear TV, the seemingly inflated investment gap actually speaks more to the enduring power of the medium – its vast reach combined with attentive audiences and the heightened impact of audiovisual creative. These traits allow it to command a premium in the media mix, one which is likely to sustain even as social media further grows its share of budgets.”

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