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The most recent ECI Inflation report, updated in Q4, forecasts the latest global media inflation figures and what impact they may have on budgets for 2023
“As anticipated, TV is experiencing steep inflation in all regions…it will be highest in North America (13.4%) and EMEA (11.3%)”
The ECI Inflation report is published annually in the first quarter, forecasting media inflation across seven media types globally and in 50 markets. With world events impacting global economies since the report was published, ECI have updated their forecasts to reflect the impact of these events on global media inflation.
Background to 2022 media inflation forecast
For a short period at the beginning of the year, optimism seemed to be in order. While Covid-19 was still prevalent, it was under control thanks to the vaccine, and death and hospitalization rates were declining. The world started opening up again, from hospitality to international borders and, for a moment, governments, businesses and individuals breathed a sigh of relief.
But then, the Putin regime invaded Ukraine at the end of February, with severe ramifications for the global economy. Fuel prices have spiralled, pushing up inflation, to which central banks have responded by increasing interest rates. Many economists expect that economic growth will slow in 2023, but can’t agree whether it will remain just above growth, or if it will fall into negative growth, plunging the world into a recession.
The advertising industry has long been a bellwether for the rest of the economy, and increasing inflation is no different. In ECI’s 2022 Inflation Report, published in the first quarter and before Putin’s invasion of Ukraine, they forecast that global media prices would inflate by 4.4% in 2022 – 5.7% for offline, and 3.6% for online.
Impact of global events on media inflation
In this, ECI’s update to the main report, in which forecasts are reviewed and updated based on the evolving landscape and economic context, it is now forecast that global media inflation will in fact be at 5.2% in 2022, with 6.5% for offline media and 4.5% for online.
These changes are being driven by the economic factors mentioned above, particularly increased CPI inflation. The report says that overall, media inflation is highest in North America (6.2%), followed by EMEA (5.9%), while inflation in APAC continues to be lower than in other regions; this is largely down to China, where media inflation is moderate and more stable than in many other countries globally.
The latest quarterly report also says that globally, offline inflation is higher than online in all regions except APAC, but all media types are expected to be inflationary, with the exception of Magazines. As anticipated, TV is experiencing steep inflation in all regions, although it is expected to be lower in APAC at 4.1%. It will be highest in North America (13.4%) and EMEA (11.3%).
The inflation story of course varies from country to country, based on factors including the resilience of the market economy, recovery from the pandemic and CPI inflation. And, the report suggests that with consumers reducing their spend, many brands will also look to reduce their spend. This will create a drop in demand for media, which could in turn reduce media pricing, thereby reversing the increased media inflation that markets are seeing this year.
The ECI Q4 update also suggests that in such turbulent times, one of the most effective ways for brands to create value is by renegotiating agency contracts and/or conduct agency pitches for marketing services, including media, creative and production. Something, the report also suggests, that an impartial, experienced and forensic media consultancy can help with, ensuring that brands identify opportunities to drive higher media value.
About the author
ECI Media Management are an independent global media management company