News

Media Hit by Deflation in Advertising Prices

Traditional media like television, radio, newspapers and magazines are projected to continue to see declines in advertising revenue.

An Oct. 5 MediaPost article titled, Report Projects 2020 Media Price Deflation: -0.9% Worldwide; -3.4% In The U.S., featured two charts and said:

MediaPriceDeflation

The economic fallout of the COVID-19 pandemic is now projected to have a pronounced deflationary effect on advertising costs for most major media and in most major media markets, especially the U.S.

That's the conclusion of a new report released by media auditors ECI Media Management, which projects full-year 2020 media costs will decline 0.9% worldwide and 3.4% in the U.S.

That's a higher rollback of ad prices than previously projected by others.

A forecast released last month by advertising management consultant R3 Worldwide projected U.S. ad costs would decline about 2% this year.

ECI's report indicates the 2020 media price deflation will be far from uniform, with digital media showing some gains, while all traditional media will see steep declines, especially print and radio.

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"2020 has been a turbulent year for the advertising industry and for the entire world," ECI Media Management's Global CEO Fredrik Kinge, noting that lockdowns have impacted many vital ad categories.

The report does not account for the ad recession's impact on social media explicitly, but Kinge said it should follow "the same trajectory" as digital display and digital video, which have proven relatively resilient to the downturn.

Yes, the media and many other industries have certainly had to grapple with the fallout from COVID-19.

Yet, Elliott Wave International also believes a developing deflationary psychology is at work.

On that note, here's how hard magazine advertising got hit in the 1929-1933 deflationary depression, as once noted by The Elliott Wave Theorist, a monthly publication which analyses financial and social trends:

The advertising industry got clobbered in the depression. Space in magazines dedicated to ads dropped by 70 percent.