Study Finds Gaps In Ad Spending Vs. Consumer Consumption Worldwide, U.S.
- by Joe Mandese @mp_joemandese, 3 hours ago
In a report that is bound to stir controversy and debate around a perennial Madison Avenue question -- what's the appropriate relationship between ad budgets and consumer media consumption shares Ascential Plc's WARC (Worldwide Advertising Research Center) and GWI (Global Web Index) have released findings of a global study of consumers purporting to show the ad spending gaps across media, as well as international markets.
The study shows what previous analyses going back to venture capitalist Mary Meeker's infamous presentations have shown: that high-demand media such as TV garner far greater shares of ad spending relative to lower-demand media such as radio/audio.
The differentials, many industry experts have argued, don't take into account the inherent supply-and-demand dynamics across each medium, which have more to do with communications value, advertising impact and effectiveness, as well as obviously supply overabundance issues.
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"The purpose of this report is to assists clients in identifying the discrepancies between daily media consumption and advertiser spend, in order to better recognize opportunities for optimization," WARC analysts write in the introduction to the report.
According to WARC's assessment, the study which is based on a survey of 715,000 consumers across 100 countries conducted by GWI, an over-weighted medium like social media would need to "reduce by $94.3 billion in order to mirror global consumption levels next year, while the investment gap is $86.9 billion for linear TV."
The report also finds that, as of the first quarter of 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."
As dramatic as social media's overweighting is worldwide, the WARC analysis shows it is significantly heavier in the U.S., according to a comparison between it and the worldwide indexes it developed (see below).
In fact, social media is the only ad medium that has a more pronounced upward gap in ad spending when compared with the global average.
When will we learn that surveys of media exposure are poor indicators of media usage and time spent. This has been demonstrated conclusively for decades with linear tv time spent among the metrics most understated by surveys. This study is an embarrassment to WARC and its members.
I have never seen any advertiser CMO or otherwise ask about the share of media time for each medium and whether they should "follow the eyeballs"---or "ear lobes"---- in their media spending. That's not the way that media spend allocations are determined and, frankly, in this case that's a sign of some intelligence---though most media spend decisions are made arbitrarily ---not based on a serious evaluation of cross platform audience data---which is not so smart. I agree with Jack. This is just nonsense---as has been demonstrated time and time again in traditional media. For example, when magazines were garnering 20% of national ad revenues, their time spent share was about 2-3%. And when radio was garnering only 6-7% of national ad dollars its share of time spent was 25-30%. How come?Or does time spent only apply to TV?
Ed, I agree that spent is only part of what should be looked at, at least it is a data driven start. As you note, most of these decisions today are arbitrary. Is that better?