2023 continues to grapple with the lingering effects of inflation on media costs. While it won’t be the rollercoaster ride that 2022 was, the advertising world should brace for the impact as we sail through the choppy waters of the current media landscape.
In 2022, media costs experienced an overall inflation of 5.9%, with some channels like linear taking a significant hit with an increase of 12.6%. Fast forward to 2023 and inflation is set to affect all mediums. Linear will continue to feel the pressure, but other channels will be caught in the storm as well. Online video is expected to see a 5.5% increase, out-of-home 4.7%, and the remaining mix around 3%.
Keep in mind that these percentages compound over time. With linear rates inflating by 12.6% in 2022 and 6.8% to date, the combined impact amounts to a staggering 20.5% inflation over the past two years. It’s not as simple as just adding the percentages, and the effect is felt deeply in advertising budgets.
Fueling the fire, ad spending is on the rise in 2023. Experts predict a 3.8% increase, reaching a whopping $741 billion. As more marketers vie for limited inventory, media suppliers will seize the opportunity to raise costs further to meet the demand.
Since 2014, the cumulative inflation rate has reached 27.1%. Today, $1.27 is needed to match the media delivery volume of $1 spent in 2014. To put this in perspective, a $10 million media budget from 2014 would now require a budget of $12,707,826 to achieve the same result.
The bottom line is: Advertisers in 2023 must navigate an increasingly complex and challenging media landscape. Careful planning, strategic investment and a keen understanding of market dynamics are essential for success in the face of inflation and escalating ad spend.
