You’d think that smaller TV audiences would lead to falling ad prices, right? Not so, according to this story in the New York Post:
Although it seems counterintuitive, it’s the law of supply and demand. As the TV audience shrinks, advertisers have to buy more ads to reach their target number of viewers. But that increased demand for ad slots creates scarcity, which in turn leads to rate hikes.
In the fourth quarter, advertisers on average paid 18 percent more for primetime “scatter,” or spots purchased on the open market, compared with the year-earlier period, ac- cording to SQAD Inc., a media research firm that tracks TV ad costs.
“I think this is going to be the tipping point where advertisers will sit there and really evaluate what they’re getting for their money,” said Jason Kanefsky, a senior broadcast buyer at ad-buying firm MPG.
So advertisers just keep paying more for more ads to reach the same audience. I can’t quite figure it out. Can you?