When I received my Media Inflation Watch email from Mike Leahy, I was concerned to see what’s happening considering the context our clients and we are operating in. For those wondering, it is really tough trading conditions for all parties, reports Kevin van Deventer.
Overall, TV rates are up 8.72% for Q1 2014 vs. Q1 2013. Good news is that SABC 1 is actually down 1.8% and SABC 2 is up a modest 3.8%. On the other hand, e.tv is up by 12.6% and SABC 3 is up by 22.5%. I can guarantee that they have not received like-for-like audience growth, so in short we are really paying more for less in these environments.
Pay TV is not looking any better, with an overall increase of 9.3%. The issue here is that performing stations, and some programmes specifically, are pushing up the rates. kykNET is up a staggering 45.2%, driven by demand rather than growing audiences. M-Net, on the other hand, is down 4.1% but so are their audiences. Africa Magic is looking good, because of the DStv Compact offering and programmes like Isibaya is driving audience growth against this target market.
Print continues to be stuck between a rock and a hard place with the ever-increasing hard costs of paper and ink and the continuous decrease in circulations being the main contributors. Overall, an average increase of 4.3% has been seen across the print industry. It was announced recently that O Magazine will print its last issue soon – very sad news indeed. It is, however, interesting to note that the biggest circulation decreases of the first quarter were seen in the weekly print titles, driven by the giants like Sunday Times and Rapport.
From a radio point of view rates are up 13.6% with the ALS format stations up by 12% and CIW (Coloured, Indian and White) format stations up 14.3%. There seems to be real growth in this medium especially within Gagasi and Heart FM but rate increases continue to be driven by Highveld, 702 and Kaya, again more by demand rather than by audience growth.
From an outdoor point of view it all depends on the site. A premium board in an area of demand is still commanding a premium rate, but overall outdoor is only up 1.1%.
Cinema is flat at 0% with a slight increase in audience, but as we know this is driven by blockbusters, which are released seasonally around the holidays and the end of the year.
Overall total media is up 7.45% driven mainly by the aggressive rate increases of TV and radio in Q1 2014 vs. Q1 2013.
For media owners, the challenge is to win a dedicated piece of the pie. When times get tough clients are risk averse and prefer to use tried and tested platforms. The top five advertisers of 2013, (Unilever, Shoprite, Vodacom, SAB Miller and FNB) are spending 65% of their media budget on TV. Radio also performs well year on year but print continues to suffer due to the declining circulation figures. Community newspapers again are the exception.
With budgets spread thin, supplying just the standard media value and solutions is not going to cut it. We are at the stage now where clients are spending less but demanding more value for their money. Clients are looking more and more at media opportunities that provide them with an edge.
As one media owner said to me recently, it’s time to tighten the belts, watch the culling, and make it out of these tough times. I think he was right. There will be a lot more consolidation taking place over the months ahead as media owners fight for their piece of stretched budgets.
Kevin van Deventer is group head of The MediaShop
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