In a world of fragmenting media consumption it is no surprise that Media Owners are looking at consolidation to protect their revenue and compete against the likes of Facebook and Google. But how will this affect advertisers? Not a lot, is the answer. Definitely in the short term although in the long term there is a case to say fewer competitors will deliver upward pressure on advertising rates. However this should be considered knowing it is a “buyer’s market” for advertisers and that the ACCC is keen to maintain healthy competition. The buyer’s market has come about due to the enormous increase in media advertising inventory while the amount of advertising dollars in the market has only increased by low single digits at best. Advertisers now have so many more TV stations, digital channels, radio stations, outdoor sites & cinema screens to choose from. Given negotiation is all about supply & demand, the massive increase in supply and little movement in demand has naturally created the buyer’s market. In addition to this, most of the media are also delivering less audience which again allows for greater negotiations. Although there are areas in each media that could be considered a seller’s market, e.g. prime outdoor sites and high rating programs, the vast majority of available inventory favours the advertisers. The latest outdoor mergers (oOh!/Adshel and JCDecaux/APN) add Street Furniture to each entity’s offerings. oOh! bought Adshel which is around a quarter of their size while JCDecaux took a huge jump gobbling up APN, around 125% bigger than themselves. The possible concern for advertisers is that JCDecaux has traditionally been reluctant to negotiate hard and could bring that attitude to the APN inventory. However, JCDecaux were able to do that as their CBD Street Furniture was short on supply and high in demand. With APN’s mammoth inventory we suspect the laws of supply and demand mean they face a new reality. For advertisers, before these mergers we had two companies to deal with if we wanted Street Furniture and after the merger we still have two companies to negotiate with for Street Furniture. JCDecaux will presumably be selling the benefit of its global data capabilities to advertisers. The Nine and Fairfax merger again should not make much difference to advertisers. In terms of deals across multiple media (Digital, TV, Print, Radio) we do not see any additional benefits to advertisers. TV stations have consistently owned other media such as magazines, digital & outdoor companies and it has always been better for advertisers to negotiate with each individual medium. The benefits seem mostly for Nine as it becomes Australia’s largest media company, increases revenue, protects its share price and enables more cross selling to Fairfax clients. The key to ensuring any future mergers do not adversely affect advertisers is the ACCC. This was evident in 2017 when they knocked back a proposed merger between oOh! and APN. The merger which would have combined the two largest providers of out-of-home advertising in Australia, creating a market leader with over 50 per cent of all out-of-home advertising, and an even higher share in some segments, such as roadside billboards. One of the major concerns for the ACCC was that the proposed merger would substantially lessen competition for advertisers.
WHAT’S NEW IN THE MEDIA – TELEVISION
There has been a lot of change in which Network owns the rights to air what in the sporting world. Here is a snapshot of where you can find the major codes.
YouTube – The Good, The Bad & The Ugly
The Good – Many advertisers choose to leverage the YouTube platform because of its ability to deliver video adverting to a tailored audience at scale, and at a competitive price.
The Bad – User generated content by nature has a certain element of risk. YouTube has historically seen advertisers pull out of the platform as their brands have shown ads before dubious content (Race Hate/Terrorist Groups etc.) Although YouTube has countered this with rules to ensure that advertisers do not show up before non-brand safe content, advertisers still need to calculate if the risk is worth the reward of getting your message delivered to the masses at a great price…
The Ugly – Recent articles published in Forbes and TechCrunch reference a very worrying flaw in YouTube’s current algorithm, that details how child predators easily gain access to, and target streams of innocent videos or vlogs of young children uploaded by themselves. Whilst the content is not sinister, the concern is the user comments left by predators and the nature of how they share this content, enables these predators to flourish on a mainstream global platform. Although your ad technically is not seen before dubious content, the content is tainted by the comments left below the video content.
Already, Coke, Coles and Commbank have pulled advertising from their platform. YouTube has quickly rectified this flaw – by removing comments on videos depicting children
2019 has started with softer ad demand in Agency Bookings with a 12.2% decline for Jan/Feb’19 compared to Jan/Feb’18. This is the first year-on-year fall in advertising expenditure since 2013. The main reason for this seems to be a decline in spend by Government, Domestic Banks & Insurance. For the Jul18-Feb’19 period, spend is down 2.4% across all media although Outdoor is the star performer having increased spend by 6.4%. Digital is sitting at around -1.1% for the FYTD (with late bookings to come through from February) however for the first time it has started to see a decline in bookings which will be interesting to see if that continues for the full financial year. For the FYTD, Newspapers have declined 7.9%, Television has seen a 5.4% decline, Magazines have the worst record at -18% and Cinema is down 16.9%.
Take-up of subscription video on demand (SVOD) and pay-as-you-go services increased by 54 per cent, from 5.9 million to 9.1 million (paid and non-paid) at May 2018—Netflix is the most used service and accounts for 3.9 million subscribers.
Nine reports small FTA growth for its live coverage of first NRL match – 1,183,000 (Storm vs Broncos)
Google, YouTube and Facebook are the most visited websites in Australia in 2018. Australians are using the internet on average 5h 4min per day
Voice search is taking off, as 1 in 4 internet users are using voice search or voice commands. This is set to disrupt the Search landscape, as instead of scrolling through search pages, people will only hear selection of one or two results
Australians love Online video, with 87% watching some form of video online and 57% using the internet to stream television