January 2009 Adnews Article - The promises of Freeview?

There is every indication that 2009 will the FTA TV’s annus horribilis. A perfect storm of lower revenues, enormous debt burdens and the rising costs of programming are converging with the cost of digital migration and undisclosed new standard definition (SD) channel costs. If this wasn’t enough, the three major commercial networks in particular, face major challenges from non-traditional competitors – even their clients. At a time when strong leadership is required the industry seems unsure how to proceed in the face of so many challenges.

The FTA industry remains tight lipped over its future strategies to cope with the next 2-3 years. The launch of Freeview in November last year promised “television like you’ve never experienced it before” and invited us to “reserve the best seat in the house…and get ready to enjoy an entirely new way to watch the television you love”. So far, only Channel 10 has released any detail on what this new experience might include with the launch of One, a specialised sports channel. Channel 10 should be applauded for its leadership given the tough trading conditions the company is facing. It is understood that the confirmed foundation sponsorships amount to additional revenues of $5-

8 million. While this is unlikely to cover the costs of One, it is a reasonable effort for a channel that is untested and a pricing model that is foreign to the FTA networks and their media agency partners.

Despite questioning the value of these additional channels, and David Gyngell has on numerous occasions, the launch of Freeview has made a set of promises to loyal viewers. To remain silent and still carry the advertising for Freeview may do more damage than good. Subscription TV competitors have been quick to take advantage of the situation by confirming they will launch a further 20 channels in 2009. This is on top of 9 channels launched in 2008. Regardless of what you think of the content on many STV channels, you have to admit that their communication and strategy seems clearer and more viewer centric than their FTA colleagues.

At the heart of the problem is content. Media analyst, Steve Allen of Media Fusion, was right in questioning the existence of more high quality content at a reasonable price that the networks could access for additional SD channels (www.watoday.com.au;  24/12/08). Channel Ten’s resurrection of the 10 year old format of Masterchef is a testament to how difficult and expensive new content is to source, even for FTA’s primary channels. Added to this, there are only a limited number of content genres that attract the advertising revenues required to fund the channels.

Channel 7 appears to be in the best shape for 2009 but it is important to note their high proportion of locally produced content. The relative cost compared to international content sourcing is significant. The network’s ability to increase exposure to these costs for secondary channels is limited. As with Channel 9, Seven is still keeping quiet over its plans under Freeview, with much of their continued effort centering on Tivo.

So where to from here? The networks have increasing costs they cannot avoid, the scope for more staff and budget cuts is limited, the advertising cycle is working against them and there is persistent pressure from competitors and new technologies.

Part of the answer is in harnessing the content initiatives and aspirations of its clients. Major corporations and governments are investigating their ability to produce and distribute content as a way of extending their brand values, key messages or their brand franchise in the minds of their audiences. This has become possible as a result of falling production costs and the ability to distribute content efficiently via broadband. Admittedly, the Australian branded content industry is in its infancy and much of the content produced to date is dreadful, unsophisticated and non-repeatable. There are exceptions however. In 2008, the Victorian Government (TAC) sponsored “Sudden Impact” debuted nationally on Channel Nine winning its timeslot with over a million viewers in primetime. This represents free content for the networks – in fact most companies will pay for distribution. Provided advertisers meet the same quality and selection criteria as other content producers, is there really a problem? There appears to be no system where commercial content of this type can be easily evaluated by the FTA networks. This may be one solution to accessing quality content for secondary channels. The alternative is that clients will find alternate ways to distribute quality content, further eroding the FTA franchise in Australia.

While this may not seem like a threat, consider Nintendo’s announcement to launch its own TV channel and programming through the Wii. It will be available in 40 Million Japanese households this year. Who do you know that has a Wii?

Integrating Search Marketing with Traditional Media - December 2008 article

While it remains unlikely Australia will suffer a sharp or prolonged recession, the media industry has been nervous about slowing volumes for months. If you work for a metropolitan newspaper right now, the market is tough. Weekly magazines are also showing the stress with limited visibility on forward bookings into Christmas. There are some winners in choppy conditions. The search (SEM/SEO) industry is widely touted as a beneficiary of difficult times. However, a new study by global search leader, iProspect, casts doubt on whether a quantum shift into search will yield the best result. The agency actually advocates a complimentary traditional media spend with search to yield the best result.

The result highlights the important knowledge and optimization benefits large search agencies such as Outrider (WPP), Columbus (Mitchells) and iProspect (Aegis) offer over search engines directly. The research also shows a growing maturity within SEM/SEO providers. It is becoming an industry that understands search is a complementary media, not the answer for your entire media spend.

Titled “iProspect Search Engine Marketing Integration Study” (August 2008), the report is a detailed set of findings and recommendations on how to increase SEM/SEO results through a better understanding of consumer and purchase behavior.

The key findings are:

The way in which we optimize our digital assets (video, pictures, press releases etc) does not match the way consumers search for a click on results.

Few companies optimize search around press releases for example, even though these appear as “news” within search results. This is an important technique by many companies wishing to protect their corporate image.

Only 55% of search engine marketers report intentionally “coordinating or integrating” their search marketing efforts with at least one offline marketing channel.

More staggering, only 12% of respondents coordinate or integrate search with TV, despite TV being the leading (37%) offline driver of search activity. Users who have been led by offline media to search are also more likely to purchase than those who have not.

24% of search marketers report that the reason for not integrating search with offline is that they are not advertising in other channels.

The study describes this strategy as “ill-advised” due to the contribution a mixed media schedule drives increased purchase intention and sell through over a 100% search campaign alone. The study advocates a well coordinated mixed media schedule, particularly inclusive of TV if this is affordable for you.

While including the company name and URL in advertisements is necessary, optimization should go further. Use of the same keys words in both offline and online campaigns is practiced by only 26% of respondents.

Major opportunities are missed by not coordinating the language, slogans and jingles within offline advertising into search campaigns. Many reasons for this lack of integration have been cited, including a lack of budget, human resources or separate divisions handling offline marketing to search activity.

 

The findings will be welcomed by the TV industry who have long emphasized the persuasive power their medium over a consumers’ emotional state and its ability to embed messages and drive sales intention. There is a great deal of scope in 2009 for better integration between the two media.

Moreover however the report shows marketers how to develop campaigns whose messages and benefits are delivered consistently across media in a way that drives purchase intention through SEM and SEO.

A copy of the report is available by contacting iProspect Australia  - Kevin.Savvas@iprospect.com.au

TV's Golden Age - fortunes of TV in early 2008- how things have changed

TV: The third golden age?

It wasn’t long ago we were predicting the end of TV and its control of the massive ad market share it commands. By 2004, online advertising was finding its sea legs after 3 years adrift. We were entering a new era of “lean forward” advertising. One clever digital guru came up with a new name for TV advertising – “passive media”.  Hardly a neighbourly gesture from advertising’s new kid on the block. 

The TV industry was caught off-guard by the onslaught. In hindsight, the campaign by Free TV to support TV advertising was a more effective advertisement for online. James Warburton, while only new to his role at Seven, was one of few outspoken voices that supported the sustainability of TV. I was there when he was booed off-stage at an industry lunch for his ‘outdated’ views. I think I booed once or twice, but admired his courage.

Five years is a long time when we are in the middle of a digital revolution. If you have been navigating the media landscape with your 2004 street directory, you will be lost. Far from being relegated to oblivion, TV is thriving. All major networks have had a stellar start to 2008, while MCN posts growth rates of over 25% with no sign of slowing.

Two things have changed that perhaps we didn’t see in 2004. 

Firstly, technology and the way we use it has changed. Australians are currently buying 1500 HD TV’s a week, with the average TV in Australia measuring 50 inches. A set costing over $10,000 in 2004 can be purchased for around $1000 today. We are in the middle of updating the way we entertain ourselves at home and this isn’t only about the home computer or iPod.

Changes to federal law have also driven innovation within our traditional broadcasting models. In the next 18 months we could see 15 additional channels, including delivery on the promise of HD TV.  Programming formats and digital extensions to programming are changing the role of the TV within the home and how we use it.

Far from declining, our TV viewing has increased. In 1999 the average household consumed 2hr 45min/day of television compared to 3hr 7min/day in 2007 (Source: Etam). While a large part of the growth comes from subscription TV, we should realise this is the result of choice. Technological innovation in 2009 continues to increase this choice and will drive household consumption accordingly. The same could be said of the likely impact of PVR (aka Tivo and iQ) penetration in the years ahead.

While there are clear and obvious technological risks to how advertising is delivered in this new digital TV landscape, the canvas is getting bigger in every way, not smaller.

The second major innovation has been to the thinking of TV executives. Let’s face it – the TV industry in 2004 was very cozy. A shakeup was sorely needed and this has resulted in better TV and true innovation in programming and advertising formats today. A better product has led to more interest from advertisers and the current good fortunes of 2008 within the TV industry as a whole.  

While I don’t envy the task in front of David Gyngell, his efforts are driving a culture within the entire industry that leadership has to be earned. Innovation across Seven and Ten is only sustainable through the fierce competition of Nine and their two year drive to innovate in both technology and programming. If nothing, 2007 put an end to old beliefs that viewers were loyal to a particular network. Clearly audiences are loyal and engaged by great content and this can be challenged by any network, including subscription TV. If included in this process, advertisers will follow with their wallets.

Despite remarkable progress in 5 years, the industry has failed to deliver on a pricing model for TV advertising post 2008. Today’s pricing models are becoming redundant because of both technology and the changing role of the TV in the home. There is no clear solution in sight and no obvious champion within the industry. 

TV hasn’t been this interesting in years and there is more drama to come.

Rant on common media measurement Adnews 2008

Every six months or so the question of a common measurement system across online and offline becomes a hot topic. Supporters of a common measurement system argue that such a move would benefit digital advertising, by increasing the measurement and effectiveness of integrated media campaigns. If internet advertising is as effective as its proponents claim, then the benefits would flow to online and other digital media.  More ominous claims have been made that digital media faces an advertiser backlash, risking millions in billings unless a common system is developed.

Those against common measurement argue that such a move would be an enormous step backwards for digital media. Why would you take the most accountable media available today and “dumb it down” so it can be compared against the scant measurement resources of many traditional media? Why is it so important for digital media to conform when there is not currently an adequate way to commonly measure existing traditional media integration? With FTA and subscription TV moving closer to digital media over the next 5 years, why would digital media move backwards?

The heart of this debate reflects two different approaches to media integration. Both sides agree that the future of media will be more complex than the past, and that digital media is here to stay. That is reassuring in itself. The real difference in opinion lies in what we intend to integrate around, and how we measure effectiveness as a result.

The proponents of common measurement see the media plan at the centre of integration. Their hope is for a system that compares the impact, effectiveness and reach of different media within a fixed campaign or period. A shared set of measures would allow media owners, agencies and marketers to communicate with a common language around an ever more complex media landscape. Different media could be valued, and included in the media plan, based on its influence on common measurement criteria.

Not only is such a proposition fanciful, it is naive and outdated.

The core proposition around any common measurement is that different media alternatives have a comparable value, impact and purpose to each other. For example it would assume a relationship in impact, purpose and desired response between a TV advertisement, online advertising, outdoor, mobile marketing and email marketing and a direct mail campaign. I pity the advertiser who hopes to succeed under such assumptions. Some of media’s most exciting developments in search marketing, branded content and activation programs will fail to fit within such a model.

Agencies and marketers against common measurement see the appropriate object of integration as the client’s core business objectives. Media is selected and measured on its contribution to achieving the goals of the client, at each level of a purchase or marketing cycle. If awareness and simultaneous impact is needed, TV is a natural fit and we should buy and measure TV on its strengths and contribution accordingly. If online is considered, we should look at its strengths and contribution at each stage of the marketing cycle and buy against those criteria. At the heart of such a technique is an appreciation that target audiences react differently to media alternatives, at different times. It also acknowledges that consumers’ relationship to the media is complex – but not unfathomable. In place of secondary research and benchmarking, primary pre- and post-campaign research becomes more important in understanding campaign impact and success. Advertising becomes a continuous process of planning and consumer feedback. The media plan evolves accordingly and measures our progress towards tangible business objectives.

With our media landscape becoming more complex common measurement is an enticing concept. The end result of such an initiative would be to rob different media of its unique strengths and marketers of their ability to understand and maximize opportunities within media.

Mobile Marketing Article in Adnews July 2008

May wasn’t a great month for the fortunes of mobile marketing. First, a study of Australians with 3G handsets revealed that only 15% use 3G features. The prospect of delivering rich advertising messages to a consumer’s pocket through mobile seems bleak. Then, a major UK study from Group M reported that mobile marketing as a viable marketing channel had “years to develop” and was in its infancy[i]. Against the backdrop of Australia’s $11B above the line advertising industry, an investment in mobile advertising would appear all too hard, with dubious returns.

So why is Australia’s mobile marketing industry thriving? Last year’s Mobile Marketing Awards, hosted by ADMA, looked more like the Logies than a group of fringe marketers with agile thumbs. This week, entries open for the 2008 awards with over 200 entries expected across 11 categories.

Much of the confusion lies with how mobile marketing is reported and measured by surveys and the broader advertising industry. To assume that mobile advertising looks like online display advertising would be a mistake, and consumers clearly do not want these types of messages from advertisers. Our relationship to our mobile phones is personal, private and protected. Most studies and surveys view advertising in a very traditional sense, and are grossly underestimating the size of the market, or measuring the wrong market altogether.

An experienced industry insider was kind enough to share a secret with me.  “When thinking of mobile advertising”, he said, “Forget about the screen. Think of the mobile phone as the world’s largest Facebook network, that people carry everywhere.” With a knowing glance he slipped back into the crowd to let me ponder on that one.

Of course, his point was that mobile marketing is more about building applications and providing some utility value, than serving display advertising. A great application that delivers value, connection or entertainment, will deliver a more effective set of brand values via the mobile phone than any standard campaign. Most activity within the industry centres around these types of applications, with very little involvement from the major advertising groups. In most cases, clients are directly engaging specialist mobile agencies.

The growing fortunes of mobile marketers and agencies are quietly surprising. On the 27^th June 2007, Loop Mobile listed on the Australian Stock Exchange, successfully raising $5 Million for its community networking platform. Adam Dunne’s company Aura Interactive, now has over 250 BlueZone™ hubs around Australia, where users can download mobile applications, wallpaper and community tools for free. Both Aura Interactive and Tigerspike are among Australian mobile marketing companies who have successfully established offices in Asia, the US and Europe. Not bad for an industry that is in its infancy.

Significant barriers to the industry still remain however. Australian telecommunication networks have failed to agree on a coordinated set of standards or an open platform for the distribution of mobile marketing. The situation is clearly absurd for a market as small as Australia and is holding the industry back. The industry also lacks a common set of measures of success, often focusing on downloads or other measures, that don’t explain the depth of loyalty or engagement great mobile marketing strategies can deliver.

Finally, Australia has yet to enjoy a consumer revolution the scale of the iPhone.  While both iMate and Blackberry have recently launched their latest smart phone ranges, they have failed to capture the public’s imagination like the iPhone.  Its introduction later in 2008 will be an industry changing event. The Australian launch of the iPhone is likely to co-incide with the opening of Apple’s latest superstore in George Street, Sydney.

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[i] Julien Theys, Group M, 'Mobile media advertising opportunities: The market for advertising on TV, video and games'.

 

Still hidden gems in traditional advertising Adnews 2008

Client advertising budgets have grown over a prolonged economic expansion since 2004. Digital advertising has enjoyed the bulk of this growth, with a rise to prominence that has surprised even the digital zealots among us. It will continue to grow and most likely support much of the expansion in the industry in 2008. Many gallons of ink have speculated the consequences and possible strategies to deal with online growth and media fragmentation.  However, because any discussion on fragmentation quickly leads to a debate on digital advertising, we often forget to consider the wider dynamics taking place within consumers’ minds. Hidden amongst the digital hyperbole are opportunities that are mostly overlooked. They are gems hiding in the world of traditional media that have come about as a result of media fragmentation.

The theory goes something like this;

Media fragmentation is not simply robbing the time we spend with different media, it is changing the mindshare and commitment we have with media alternatives, including the long held relationships between traditional media.

Consumer behavior is changing as more media becomes an “on demand” experience. The type and complexity of advertising messages we are able to deliver within media is also undergoing an evolution.

As an example, consider the effect web surfing in the lounge room is having on the level of attention we are giving TV advertising. Call me naïve, but if you are at home watching House, you are unlikely to be actively online as the patient goes Code Blue or reveals a spectacularly unfortunate rash.  Your attention is most likely taken away during ad breaks. This isn’t to say that TV advertising isn’t powerful. It remains our most impactful media and will remain so.

The point is, advertisers and their agencies would benefit from understanding that there is an attention shift and audiences are consuming smaller pieces of information during their media experiences. Most newspaper editors know this and have made their average article lengths shorter over the last decade in response, particularly online. The good news is that while the media bites we consume may be getting smaller, the number of exposures, or times we are accessing the media, is increasing.

What we are left with is a media landscape where messages need to be more simple, however, there are more contextual and involving opportunities to deliver them.

At Aegis Media and Carat, along with the brightest local media agencies, we are focusing on increasing our strengths in two key areas in light of changing consumer behavior. We are investing in;

1.       Media opportunities that overcome the effects of fragmentation

2.       Media opportunities that combine the messages we have delivered across media (digital and traditional) to deliver the right sales or brand response

 The important opportunities that assist us overcome fragmentation include sports and entertainment marketing and in-program placement. This type of advertising is effective at carrying commercial messaging across media platforms that cannot be unbundled. For example, Hutchison’s 3 Mobile and the KFC sponsorship of the cricket is prominent whether you are watching the cricket  via TV, internet or mobile.

Marketing and promotional opportunities have become a central part of our agency’s media strategy, in combining the messages we have delivered across complex media plans. The benefits delivered by a well run promotion or point of sale campaign have been enhanced by fragmentation. Marketing promotions used to be perceived as a direct sales tool – generating short term results with little long term branding benefit. Our position at Aegis has changed. We view marketing promotions as a key tool for aggregating messages we have delivered across media. We have had spectacular success assisting clients either enter the customer’s consideration set, or drive direct sales through in-store, on-pack and other marketing promotions. Post campaign surveys also indicate a greater brand involvement and loyalty among those exposed to such promotions.

Our launch of Carat Activate and purchase of Australia and NZ’s largest independent marketing promotions company, Apollo Marketing, underline this commitment.  Many of our peers such as WPP also see the opportunity.

The rise of digital has been amazing, however there are still hidden gems hiding in traditional media’s backyard.

Sports marketing and sponsrship article from Adnews in 2008

With the Olympics looming it is worth admiring the scale of the commercial machine that is driving the event. Beijing is not simply the 29^th Olympiad, it is the largest advertising and sponsorship event in the world to date.   Despite the time zone challenges, the Chinese games have captured corporate and public attention for lucrative US and European broadcast rights. The scale of investment, achievement and ongoing fascination with all things Chinese has propelled this Olympics into a world of its own. 

As impressive as the Chinese games will be, part of the commercial success can be attributed to an increased global interest in event and sports sponsorship. Year on year growth of direct sponsorship from 2007 is 15%, the vast majority of this going to sports sponsorship. This is more than twice the average global growth of the advertising industry as a whole. This year, USD$43.7 billion will be spent globally on direct sponsorship contracts. As a rule of thumb, for every $1 in direct sponsorship at least $1 is spent activating the sponsorship and a further $1 in advertising them - meaning companies are spending over USD$131 billion in 2008.

Not surprisingly, APAC is the fastest growing region in 2008 with direct sponsorship investment growing from USD$7.2B to almost USD$11B. While the Olympics have played a key role, the explosion of IPL cricket in India has also been a key player. Smaller events such as the Singapore Formula 1 and the prestigious Volvo Ocean Race also have an important role in a crowded 2008 sporting calendar.

Part of the shift in advertising dollars to major event sponsorship is a response to the evolving media landscape and how we consume media as a whole. We have become a world of media snackers with more sources of content than ever before. Effective event sponsorship delivers value for the sponsor in short form formats, like the news, or long form full telecast formats. Great sponsorships are also media agnostic and are prominent whether the viewer is watching TV or online.

KFC’s sponsorship of the cricket is an example of Australia’s most effective sports sponsorshis. While I should declare my interest as the head of the agency of record for KFC, the program is also the result of the strong relationship between KFC and Cricket Australia. On-pitch, in stadia and perimeter branding rights and the use of branding for marketing purposes combine to surround the event and audience with the brand values of KFC and excitement of the game. The package is carefully crafted to support, not annoy the viewing experience, while ensuring the two cannot be separated. The sponsorship is further leveraged with franchisees, suppliers and partners of KFC to deliver an impact that a standard media schedule could not deliver.

The question for marketers and media professionals is how to value and gauge the likely impact of competing sponsorship alternatives. While a sporting sponsorship delivers excitement, does an arts sponsorship deliver a depth and connection that is more meaningful?  Does the star power of Cate Blanchett provide an associative “brand halo” when considering a secondary or tertiary sponsorship with the Sydney Theatre Company?

If you are unsure of these issues, or have never purchased a sponsorship, it is best to employ a specialist in the area. The initial package presented rarely represents all the value available, and tools are available to assess the likely media equivalent impact of any given sponsorship. Finally, advice on how to activate and leverage the sponsorship delivers almost all the value of the program, so taking the risk is not worth it.

Is media integration always right for publishers?

The financial reporting season highlighted the strength of digital operations among major publishers. Almost all digital divisions recorded strong profit growth, with Fairfax Digital being a stand out among Fairfax’s results in particular. While 9MSN has had its difficulties, Jo Pollard’s appointment as CEO, is a good result for a great business. Among all this success however, the industry still hasn’t managed to get cross media integration right. While there are some exceptions, such as Channel Seven’s Olympic packages, publishers have yet to prove that integration at the publisher level consistently delivers value to clients.

The proposition for why integration should work is compelling. Through using all a publisher’s assets in concert, the audience is immersed in a content experience that works to the strengths of each media. An advertiser is able to leverage greater impact, and a broader set of messaging opportunities, through this higher audience involvement. For example, if you are using print and online, the print campaign delivers great impact through a large creative pallet and high quality colour production whereas online allows you to explore an advertiser’s offer at the click of a button.  Sounds perfect! However the problems start arising almost immediately.

Firstly, audiences use different publisher channels differently. For example, one of the best entertainment sites in Australia is the Sydney Morning Herald. The entertainment section is young, female skewed, dynamic and celebrity focused. The print Entertainment section is none of these things, although it serves as a comprehensive listings and information product, with good arts profile pieces.  

Secondly, the advertising cycles are different. Online media is usually scheduled monthly and planned up to 3 months in advance. This is largely due to the longer digital creative production times and the way online media CTR performance builds over several weeks. Many traditional forms of media are more tactical and planned around shorter bursts .  Cancellation policies between media channels are also different, even within the same publisher, making true integration planning and buying difficult to move and manage.

A final point is that most publishers have set up separate integration teams. The Integration Director is the poor soul tasked with negotiating through all the businesses within a publisher to pull together cross media deals. Many an integration specialist knows the desperation of wishing somebody would give them the time or information they need to do their jobs. Apart from major event sponsorships, the integration team is outside the daily running of various advertising businesses and rarely given the best deals on offer for packages.

There are other reasons why extensive cross media packaging is difficult to achieve at a publisher level, however, my point is that most integration attempts have simply increased publisher’s salary costs and generated a handful of interesting event and product launch sponsorship deals. It is a problem that weighs heavily on media owners as they are justly proud of all parts of their business and see genuine advantages if clients spend across multiple products.

Perhaps a better way to achieve true integration is to look at parts of the existing industry that already handle integration well. Media and advertising agencies, by definition, are skilled multi-channel media practitioners. Their core offer is to integrate strategy, planning and buying activities across all media and multiple media owners. Granted, some agencies are better at new media than others, but a more collaborative approach between agencies and media owners to integrations is likely to deliver greater returns to the industry as a whole.