The Hurting Side of Media Oversupply

Michael Hedges September 23, 2009 Follow on Twitter

New media has raised both supply of and demand for media. Households spend more time and money with media and media products. Demand drives supply. The down-side hurts, too.

Two studies conducted in France show clearly the shift in media economics. French consumers are spending slightly more on media and media products, mostly for the Web. French advertisers are spending less for media, mostly through falling ad rates.

French media measurement institute Médiamétrie surveyed households for media spending habits over the last year. Results were released last week (September 18). The average spent on media and media products rose, year on year, 4.3% to €2435. (See Médiamétrie release here - in French)

One-third of household spending on media went to telephones, €805, mobile and otherwise. Most of that amount, which rose 3.1% year on year, went to mobile subscriptions. “We can not deny that there is a craze for new services like 3G phone and more specifically the iPhone, but the impact is not big enough to blow up,” said Médiamétrie’s Jamila Yahia Messaoud to AFP. The joke, of course, refers to the rash of exploding iPhones in France.

Radio and television is the next biggest slice of media budgets. Including the radio and TV license fee for public broadcasting French households spent €635, a 7.6% increase. Much of this budget item went for digital TV receivers, antennas and other equipment. Digital TV migration will be completed in 2011 so there’s more to be spent on the TV sets.

Fastest growing but modest in total spending is the household internet budget; €264, up 22%. Half of the household internet budget, said Médiamétrie, went to new household internet connections. “Internet access has become indispensable to be part of society,” said Médiamétrie’s Messaoud.

The big media loser is music, only €70 in the budget and falling 23%. The report suggests CD purchases are victim of both piracy and pure economics. Perhaps it’s the same.

Just under one-fifth of the French household media budget is for ‘other,’ a catch-all for everything from newspaper subscriptions, GPS devices and PC purchases. This amount, €460, is unchanged year on year.

Over on the supply side, France Pub released a study of media spending by advertisers. There are, said the report, no winners with advertisers spending 14.8% less in 2009 over last year. Not a surprising anybody, ad rates are falling like a rock. Media spending in France for the first seven months this year dropped 15.5%.

Further noting the great advertising shock, ad spending as a percentage of GDP (gross domestic product) will fall to 1.52% in 2009, they predict, from 2.08%.

"A structural phenomenon emerged from the years 2000-2001,” said study director Xavier Guillon to Le Monde (September 19). “Whatever the economic environment, we are witnessing a deterioration in value (due to) oversupply.” The France Pub report says this trend in ad spending will continue in 2010.

And who can blame advertisers big and small for negotiating lower rates. That “oversupply” comes from increases in digital television channels as well as Web offers by an order of magnitude. Ad rates rise and fall based on availability and advertisers seek a common rate across all media.

French households are spending more on media and media products and much more on internet access. Television and, certainly, mobile media are also important parts of the household budget. Other parts of the household media mix are less important.

It’s no surprise that advertising shifts with consumers. And it’s no surprise that both advertisers and households are benefiting today from the oversupply. But economics also teaches that the elastic band of supply and demand never stays constant.

See also in ftm Knowledge

Media in France

French audiences are moving fast to every new platform. Mobile and Web media challenges the old guard while rule makers seek new directions. Media life in France... and a few secrets. includes updated Resources 103 pages PDF (November 2009)
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