Cost of TV ads falls to lowest in decades as recession bites

Prices set to fall by 16 per cent year on year as demand weakens

The cost of advertising on television has slumped to its lowest level in decades, says a report today by Billetts, a media and marketing consultancy. Television advertising rates prices are set to fall by 16 per cent year on year in response to weak demand from advertisers, and the drift of audiences to the internet. At approximately £4.16 per 1,000 adults, the price of reaching an audience via a television ad slot is the lowest since the 1980s, and the switch to digital means adults are watching more hours of television.

Billetts say that TV advertising revenues for the first half of 2009 have been worse than any commentator predicted at the start of the year. The advertising recession continues to hit the traditional media. Advertising in national newspapers will be, on average, 5 per cent cheaper this year, say Billetts, and consumer magazines 9 per cent cheaper. TV listings magazines and the women's weeklies are set to be the hardest hit.

Billetts are predicting display advertising prices in national press to fall by 7 per cent for mono and 5 per cent for colour during 2009. But even the web is not immune form the slump in ad spend in today's straitened times. Billetts report that display advertising on the internet will be between 5 and 10 per cent lower in 2009, with only the cost of search advertising online growing, and then only in certain categories.

The slowdown in consumer demand, especially for "big-ticket" items such as cars, the housing crash and rising unemployment, is reflected in a worse-than-expected drop-off in advertising spend behind these lower prices.

"Cost-wise, it's a great time for advertisers with prices so low, but the severity of the downturn will have serious medium to long-term implications for media owners and agencies in the same way as it already has for some of their clients," said Nick Manning of Billetts.

Advertising revenues to the television companies, dominated by ITV, are forecast to be £475m, or 14 per cent, lower this year than 2008, itself down £175m on 2007. Analysts say that the television advertising market has never shrunk for two years in a row before.

Billetts' early outlook for 2010 shows little cause for optimism, fuelling fears that the industry will witness three consecutive years of revenue contraction. One reason for this is thought to be that that next year's advertising budgets will be set using deflated 2009 budgets as a benchmark, effectively delaying any upturn in advertising spend.

National newspaper ad revenues will be down by £252m, or 18 per cent, year-on-year and consumer magazine ad revenues will fall by about £100m, again 18 per cent, said Billett. "It was said that offline advertising was migrating online but our forecast is predicting online revenues to grow by just £15m in 2009 with the growth of recent years stalling."

In the short term, the most competitive media pricing in recent memory is seen as good news for those advertisers with budgets to spend and who are looking to gain a competitive advantage at a time when rivals may be finding their budgets squeezed. The severity of the advertising downturn is pushing many media concerns into aggressive campaigns to cut costs and fire staff. An average of 140 media jobs a week have been lost since the recession began.