Media deflation helps advertisers do more with less

Although 76 of the 100 Leading National Advertisers (LNA) cut their spending for 2009, that doesn’t mean they did less advertising. A new, previously unheard-of, phenomenon called media deflation has helped many do more for less.

One cause is that mass media are hemorrhaging audiences left and right. With newspapers, that’s old news, but as of the week of July 4, broadcast television – ABC, CBS, FOX and NBC – had the lowest number of prime-time viewers since 1990. Another cause is that many advertisers just aren’t advertising anymore; compare the thickness of any current newspaper or magazine with your recollections from just two years ago.

But media’s loss is advertisers’ gain. Following the law of supply and demand, media are cutting pricing to increase demand. Radio and television air time has historically been negotiable. This is because broadcast media, unlike print media, cannot contract or expand with advertising demand. There are 24 hours in a day and only so many minutes of advertising time per hour – and when that air time’s gone, it’s gone forever. That’s why all but the most naive advertisers have always negotiated down rate-card rates.

But now, even print media are negotiating too. And you can see the bottom-line effects of media deflation on many advertisers’ 10-Ks and annual reports. Anheuser-Busch InBev noted “media and advertising cost deflation in key markets.” Diageo says it took advantage of “media rate deflation” throughout North America. Kellogg reported that “media deflation” in Europe increased operating profits. Procter & Gamble, the world’s largest advertiser, said “media rate reductions” helped lower their marketing expenses as a percentage of sales.

And it’s not just the LNA. In its 10-K filing, Revlon reported cutting worldwide ad expenses by 10% versus 2008. They saved $24.8 million. But “as a result of achieving lower advertising rates,” they actually “increas[ed] the level of media support.”

In other words, more ads for less bucks.

If you’re a local or regional advertiser, you obviously don’t have the leverage of a P&G or even a Revlon. But you do have the lousy economy on your side. So before you conclude you can’t afford to advertise, throw away the old rate cards and look at the newest ones. Rates are probably lower. And then, take those rates as a starting point. When you talk to the media reps, negotiate. Bargain. Haggle.

You’ll be helping them fill their publication or station with ads. And you’ll be helping yourself to big savings. And, hey, the worst they can do is say no.