A huge media inflation will remain for advertisers in the foreseeable future, according to media agency MindShare, which anticipates the cost of buying TV will rise by 10 per cent or more in at least eight regional markets over the course of the year.
TV, which accounts for around two-thirds of ad spend in Asia-Pacific, is set to experience double-digit inflation in 2006 in China, Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore and Vietnam, MindShare said, after completing a study gauging the real costs of media buying for brand-owners after rate card discounts are taken into consideration.
Spiraling costs are being driven by intensifying competition between advertisers chasing millions of new consumers benefiting from rising levels of affluence. Indian Demographics has estimated that between 2004 and 2014, nearly 65 million new house holds in Asia will qualify as middle-class, an annual growth rate of 10.8 per cent. Airtime prices have also risen sharply in markets with a dominant broadcaster, MindShare reported.
The response by advertisers has been aggressive hikes in media budgets, often significantly greater than current media inflation. Some of MindShare's Indian clients have increased media budgets by more than 50 per cent for 2006, the media agency said.
The estimated increases, though high, are generally on a par or less than 2005 however. Inflation in Asia is contained but it is contained at a fairly high rate, but It has stabilized at a double-digit rate. The importance of India to the future prosperity of many multinationals has helped ensure that inflation here is especially acute, the only market in MindShare's report where double-digit inflation is set to affect all media channels this year, apart from China's.
MindShare forecasts that inflation levels will mainly remain the same as 2005, with the exception of rising newspaper costs, predicted to rise from five per cent last year to 10 per cent in 2006, and cinema, with airtime price rises increasing from 15 per cent to 20 per cent. Inflation for outdoor advertising will be highest at 30 per cent, MindShare said, the same as 2005, while TV, magazine and radio inflation are also set to remain steady, at 15 per cent.
