This month our very own media guru and resident Research and Strategy Director, Steve Allen, predicts how advertising spend will pan out over 2021. Steve spends a lot of time measuring and calculating the Media markets, not merely because it is the business sector we are in but far more importantly because it tells us and our Clients what market conditions they will face. Demand and supply cascade into pricing, which can be highly variable as Media change their selling and pricing policies constantly, based on both forecasts and demand (and/or fill)
2020 was a year of two halves from Media & Marketing perspectives. In the first half of 2020 Media Revenue was down 24% based on SMI figures, the biggest drop in 50+ years of tracking. The second half decline was only a little over 7%. This, and more recent SMI data, points to Australian advertising spend recovering from Covid-19 far more rapidly than first expected. As is the case for the Australian economy and quicker than pretty much all westernised developed economies.
There is no doubt Government stimulus programs, particularly Job Keeper and Job Seeker, have played a very large role in this recovery and momentum. On SMI figures, 2020 finished 15% down in Media Advertising revenue, well below many forecasts. Digital fared best and was just 2.5% down in 2020, while Television was next best / worst at -12%. All other media were down 20%+ with Cinema, Magazines & Outdoor getting smashed in 2020.
Steve forecasts 2021 SMI figures to be up 12% YOY which would still be around 5% below 2019 SMI estimates. To date in 2021 SMI has January -3.1%, February -2.6% and for March Steve estimates at +7% result. Although Q1 is behind Steve’s 2021 forecast, in our dealings with the Media, Q2 has definitely picked up strongly in many media sectors.
SMI is media agency expenditure and therefore does not include clients booking direct. As a very rough guide, SMI covers around 50% of all spend and around 80% of most media’s advertising income however vastly under estimates Digital. Due to the enormous long tail of bookings by smaller clients it is hard to determine what is spent on Google and Facebook. Steve’s 2021 forecast for expenditure and share for the “entire market” is as follows;
The rest of the economy is already firing up. Economic recovery is strong, ahead of nearly all predictions, surprising on the upside with nearly every monthly release of economic indicators; Employment, Retail Sales, On Line Sales, December HY trading and profit results, savings, Credit card debt etc. This raft of performance indicators should be underpinning a much larger lift in Advertising support.
There is also a huge opportunity for clients to invest in advertising particularly if their competitors are not. What better time to build market share if sales in your category are coming relatively easily?
The rise of the smart speakers (think Google home, Sonos, etc) and smart phones has well and truly buried the old transistor or large stereo in the corner of a lounge room. This all means audio streaming is moving ahead fast. Today 9.4 Million Australians are streaming audio and projections show this will increase to 80% of all Australians by 2024.
The Radio networks naturally want to capitalise on this streaming and offer listeners the freedom to consume Radio, Music and Podcasts at their time of choosing. ARN launched their app (iHeart) back in 2013 and SCA has now just launched their ‘Listnr’ app. Nova will also be launching their app soon.
The apps allow the networks to connect ad exposure to real world behaviours and quantify the impact that audio has on in store visitation. The apps mimic industry giants like Spotify and Apple Music by attempting to deliver a curated audio experience which combines radio, podcasts, music, and audio news under the one roof.
From a customer point of view, the apps are based around finding people’s interests and likes and making suggestions for them based off what they listen to. From a client point of view, it is about creating an environment where it can build rich first party data that will allow advertisers to reach audiences across a broad range of audio assets on one platform.
Upon registration users are asked to provide their personal details and nominate interests which will allow the advertiser to audience target based on age, gender, ethnicity, geographical location, and device.
At present, it is estimated that Radio streaming could add 5-10% reach to a traditional Radio buy. So although it is still small numbers, it is growing and no doubt the Radio Networks see it as a way to capitalise on a digital future.
3rd party cookies are due to be phased out by 2022 and we can’t emphasise enough the importance of building your 1st party database. The future without 3rd party cookies is yet to be determined although many major publishers have released thoughts on what the new way to universally target unique consumers will look like in their eyes. At this stage, standpoints have varied and it is still the great unknown without a one size fits all solution. The three types of data for ad targeting across the internet of the future are;
Chrome privacy sandbox: Google’s solution is called the ‘Privacy Sandbox’. Google will generate audience segments where data is stored and processed in the Chrome browser. This will represent around 65% of the market. The data will be modelled with no user or device level data and is called FLoC also known as ‘Co-horts’. This is essentially fused data via machine learning on a group of individuals based on how they have behaved on sites and what content they have viewed. This is not built on an advertisers 1st party data, nor can you target individuals within a FLoC, you can use your data to determine which FLoC’s you want to reach. This will deliver a large scale of audience but perhaps less accurate.
Publisher 1st party data: Major publishers (Nine, News, etc) are looking to use their 1st party cookies to build user level data comprising people based and anonymous device data. The benefit the publishers have is their consumers sign in and are effectively giving permission to be tracked within their site. This will be highly accurate and deliver a decent scale but not to the size of Google. The missing piece of this puzzle, is we currently don’t have a solution to cross-pollinate audiences across publishers. There has been much discussion on exactly how users will be uniquely identified across the open web. Will it be an exchange of hashed email addresses? Will it be a phone number? Will there be an opt-in?
Identity based solutions: A direct relationship between the user, publisher & advertiser. Eg. Advertiser meshes their 1st party data with the publisher, who also has a 1st part relationship with the end user. This mesh data can be IP address, email, phone number.
The common theme on these points, is both as a publisher and an advertiser, you will need robust 1st party data to continue to have targeted digital ads from Jan 2022. Especially if your current strategies rely heavily on third party cookies.
From a programmatic perspective, we believe targeted advertising, and, re-targeting capabilities across a collective of sites will still be possible once there is clarity on the unified ID and private exchange of information.
For now, on the face of it and combined with what we already know, the latest Google announcement does mean, as both an advertiser, and as a publisher, never has it been more important to invest time, energy, and resource, into strengthening your 1-1 customer relationship, and ultimately your 1st party data.
The media Agency market is heading in the right direction in February, reporting a -2.6% year-on-year decline to $557.9 million. However, given the huge declines in advertising spend from March–September 2020, there is little doubt that the next 6 months of SMI data will show positive year-on-year growth. It is also highly likely that FY21 will finish as a positive as it is now only back -5.8%. April-June 2020 were the months most affected by the Covid downturn.
Government advertising spend continued to help February 2021 and was up 60% while In-Home Entertainment was up 69%. Clearly the home related sectors have benefitted from these difficult times. But the overall recovery story was strongly underpinned by a small 0.1% year-on-year increase in Automotive Brand ad spend, it’s first in more than a year. It is promising to see positive movement in what was once the largest spending category
Television delivered the strongest growth (+8.6%) led by Metropolitan TV (+12%) which was buoyed by the delayed Australian Open broadcast. In comparison, Digital ad spend lifted just 1.2% this month and – like the broader market – also reported patchy demand with strong growth in ad spend to Social Media (+12.3%) and Video Sites (+12.7%). But the value of bookings to the largest sector of Search fell 8.4%. Patchy demand was also evident in Outdoor with the largest Posters/Billboards sector growing 9.1% and Retail Outdoor +1.2%. But Outdoor’s recovery is being hindered by large declines in bookings to the Aviation, Transit and Street Furniture sectors. Radio was down (-10.8%), Newspapers -23.4%, Magazines -48.2% and Cinema -70%.
by Emily Searle
With Summer coming to an end it got us thinking about how the seasons affect the advertising markets. Everyone concentrates on the quarters of the financial year (understandably) but we thought it could be interesting to analyse the media by season. What effect does Summer, Winter, etc have on advertising spend, media consumption and opportunities for clients?The financial controllers at agencies and media companies ought to feel happy to see the back of Summer. Without doubt, Summer is the worst season for advertising expenditure. On average, over the past 8 years, the advertising spend in Summer has been at least half a billion dollars less than each of the other seasons. Winter usually has 40% more advertising spend than Summer while Autumn and Spring have around 20-25% more.In terms of media consumption, the seasons, along with school holidays, have varying effects on the media. Magazine sales peak in Summer as people have time off to relax and enjoy their favourite magazines. While for Television, the Summer ratings are around 10% lower than other seasons and peak in the winter months. Without the Tennis and Cricket the ratings would probably be lower. The way Radio is surveyed, with 8 surveys rolling into one another, makes it difficult to determine listening by season. However, the Radio stars invariably take Summer off and less people travel to work suggesting it is reasonable to assume Breakfast and Drive sessions have their lowest ratings in Summer. Newspaper readership and Digital consumption is relatively consistent across all the seasons. Summer’s longer daylight hours and warmer weather gives Outdoor a 5-10% lift in media consumption compared to other seasons while Cinema consumption peaks by 40% around school holidays. Summer is again Cinema’s highest season with Boxing Day doubling their usual audience.As Summer has the lowest advertising spend, and therefore demand, it delivers the greatest opportunities for advertisers. A huge opportunity is the ability to boost Share Of Voice substantially and take market share from competitors that leave the market momentarily. In most media the rates are reduced well beyond any audience decrease to entice spend. Simply put, Summer usually represents the lowest cost to reach one thousand people in virtually all targets. So it is with mixed feelings that we say goodbye to Summer. We know more advertising dollars will be spent in Autumn but also know the deals won’t be as good in the following seasons.
QR code stands for Quick Response code and was first designed in 1994 for the automotive industry in Japan. We all thought the QR code was long gone especially as we had to download a specific app to use it. However the combination of technology advancements and Covid has given the QR code a new lease of life. In 2017, Apple’s update allowed QR codes to be scanned directly through the camera app and now the latest Android smartphones have made QR scanning a native feature. With thanks to Covid, we now constantly use a QR code every time we enter a shop, restaurant or government business. It is second nature.We are now seeing QR codes used in advertising once again. Using today’s papers as a guide, around 20% of ads have a QR code. The Outdoor companies are also seeing a lot more demand for it on their street furniture.A QR Code can be linked to an image, video, landing page, and websites for various purposes. Although they are predominantly black and white, QR Codes can be customized to change background colours and add a logo.
A lot has been written about the squabble between the Australian Government vs Google / Facebook however things do seem to be moving in the right direction.Google have been proactive before the governments bill is passed and have struck deals with multiple publishers. Most notably with Seven West Media announced to be worth $30 Million as well as Nine reported to be worth $30 million, this has yet to be formally confirmed by the publisher. ABC has also been included with the code, but the amount is yet to be disclosed. More details of the deals will be released after they are finalised within 30 days. Although the total cash amount of these deals hasn’t been disclosed to the public, Google has set aside $1 billion dollars for worldwide deals over the next 3 years. In addition to the major news organisations, Google have also struck deals with the leading regional and independent publishers under their “News Showcase” tab on the Google News app.After a clumsy reaction to the bill, Facebook has now stated that letters of intent have been signed with 3 independent news organisations Private Media, Schwartz Media and Solstice media. It will be interesting to see if Facebook add a news tab to their site, similar to marketplace.There are a few theories as to why the Government is introducing the bill such as protecting the traditional news companies or reducing the power of the tech giants. Whatever the reason, it is interestingly reported that for every $100 million of online advertising, $53 million goes to Google, $28 million to Facebook and $19 million to everyone else.
The January SMI figures are the first time in four months we have had a negative YOY result. January advertising spend was -7.3% compared to January 2020. Moving the Australian Open broadcast from January to February is considered a major reason for the decline. The 2020 January figure was back 8.2% compared to Jan’19 which included the Australian Open so all things considered, this January is not such a bad month. The general feeling is advertising spending recovery is continuing.
Government advertising spend was a big contributor to January 2021 and was up 56% while Home Furnishings was up 30%. Domestic Banks were down 33% which is probably because they are inundated with customers refinancing their home loans or looking for new loans. Travel was down 55% and Auto was down 17%.
The biggest news from the January spend is that it was the first time Digital achieved the highest spend of all media and was up 1.8% YOY. It pushed TV off the podium by a few million dollars. TV was down (-2.6%). Radio had a comparatively reasonable month of late only being down -4.6%. Outdoor was -24.6%, Newspapers -33.5%, Magazines -47.8% and Cinema -66.7%. The Regional TV and Regional Radio sectors performed well and grew ad spend by 3.3% and 9.3% respectively. While Retail Outdoor led the Outdoor recovery with a 21.3% lift in ad revenue.
There is no doubt we live in strange times and perhaps one of the more intriguing by-products of this is the effect it is having on Regional Australia. Data from the Australian Bureau of Statistics shows some 11,200 people relocated from the nation's capital cities to regional areas in the September quarter, the biggest quarterly movement out of metropolitan Australia on record. In the June quarter, the capital cities had a net loss of 10,500 people to regional areas which was the previous largest net quarterly move on record and more than double the average observed over the last decade. Job vacancies across regional Australia also hit a record high of 54,000 in October, up 7.4% on September, and a 13% increase from a year ago.Interestingly, overseas migration makes up an enormous proportion of the capital cities annual population growth. At last count, overseas migration made up 93% of Adelaide’s annual growth, 85% of Sydney’s and 70% of Melbourne’s. Assuming overseas migration is unlikely to happen in the next year or so, capital cities are going to struggle to show any growth while regional Australia seems to be having a population boom.Now that WFH is becoming a thing, it seems many people are making the sea change, particularly in areas of 1-3 hours away from a capital city. So much so that house prices in regional Australia have risen at a higher annual rate than in capital cities for the first time in more than 15 years. Regional prices grew almost 7%, more than three times the capital city growth of 2%.From an advertisers perspective, regionals deliver a number of enticing facts such as having 5 of the 10 biggest online shopping postcodes in Australia. Or that the NT has a median income 20% more than the capital cities or Queensland has 51% of it population in the regional markets. The regionals also have more disposable income due to the lower cost of living.Looking at the SMI data, Regional TV has stayed at around 14% of all National TV ad spend for the last 10 years. Regional Radio has fared better growing its share of all National Radio spend from 16% in 2010 to 23% in 2020. The closure of many regional papers in July last year has definitely helped the regional radio stations gain more advertising dollars.However, only around 10% of advertising budgets are spent in the regional markets even though 36% of the country live in those regions. These figures obviously look disproportionate although the cost to reach people in the regional markets is generally somewhat cheaper than reaching people in a capital city. As an example, if it costs $100 to reach a thousand people on Metro TV, it only costs $40-$60 to reach a thousand people on Regional TV. Even with this TV cost efficiency, the regionals still underperform for their share of advertising dollars. Unfortunately the lower cost (with arguably greater impact) is not enough to lift regionals up the ‘priority spend’ criteria. Advertising budgets are invariably prioritised to the larger markets which is usually to support distribution / store fronts. With ecommerce ever increasing for clients, this could change although for large products requiring truck delivery the cost of distribution can become problematic.Our advice is to have an open mind about regionals especially as it is absolutely on trend at the moment!
Channel 7’s latest ‘golf’ show, Holey Moley, (think a cross between Ninja Warrior and It’s A Knockout), launched on Monday night. It was a successful launch with 1.58 million viewers nationally and easily beat MAFS and the Amazing Race that were aired at the same time.The commentating combination of Matt Shirvington and Rob Riggle (US comedian) has great chemistry and ensures the program is not taken too seriously. How could it be when contestants are set alight or have Agro abuse them whilst they are trying to putt a golf ball. Initially it was going to be filmed in the US with the AFL commentator, Brian Taylor, and more air time for Greg Norman. However Covid shut that plan down and it is now filmed at Thornlands in the city of Redland, Queensland. As this is an international format, the set can now be used by other countries for their local productions.The show is running for 13 episodes and is presently the number 1 show for People 16-39. Last night’s ratings were around 40% down from the launch so it will be interesting to see how it rates next week.
Apple started the cookieless future back in 2017 through the introduction of the Intelligent Tracking Prevention (ITP) on its default ‘Safari’ browser. This was the start of advertisers or websites being unable to follow you around the internet with specific ads. Now Apple’s latest software upgrade (iOS 14) introduces the App Tracking Transparency (ATT) request permission from users to allow applications on your device to collect & share data/tracking signals to advertisers.
This limits the data that Facebook and websites now have to track consumers making it harder to track and understand collected data. As more people opt out of tracking on iOS 14 devices, ads personalisation and performance reporting will be limited for both app and web conversion events. Facebook won’t be able to tell us who converted from their platform and the apps / websites won’t know the age, gender, placement or location of the people who have landed on their site.‘Real time’ reporting is no longer on those devices and data may take up to 3 days to be collected meaning we can’t make quick changes or optimisations. We used to have the 28-day click-through, 28-day view-through and seven-day view-through but this will no longer be available. Attribution allows us to see the actions a user takes after clicking on an ad and prior to converting. The window of actions we could previously collect data on was 28-days prior to the conversion, but this update minimizes the attribution to a 7-day attribution window.In the meantime, if you would like to read more on Facebook’s changes here. If you have any further questions, please do not hesitate to reach out to our team to discuss how we can help you navigate the changes with your business.
December SMI continues the good news of October & November as it is another positive (+2%) compared to the same time last year. This means the Oct-Dec’20 quarter is up 5.3% or an extra $100 million has been spent on advertising compared to the corresponding quarter in 2019. However, it should also be noted that 2020 is -15% down compared to 2019. For the first time since 2009, the SMI figure is below $7 billion with the 2020-year total sitting at $6.24 billion.
The categories that greatly affected 2020 were Travel and Auto and between them there was close to half a billion dollars less advertising spent in 2020. Advertising spend on Gambling was also down $50 million. The categories that gave 2020 some hope and had double digit growth were Healthcare, Technology and Food.
The big winners of the Oct-Dec’20 quarter are Digital (+18.3%) and TV (+15.7%). Radio has recovered somewhat but was still -3.9% down for the quarter. For 2020, Digital escaped with the least pain being down -2.5% for the year. TV was -12%, Radio -22.7%, Newspapers -26.4%, Outdoor -38.4%, Magazines -42.4% and Cinema -67.9%.
Broadcast Video On Demand (aka BVOD) is the most important growth area for Television Networks for both viewers and advertising revenue. As any business owner will tell you, it is essential to have multiple income streams and BVOD definitely gives the Networks an additional income stream.BVOD is when you are watching a program online in your own time of choosing. It can be watched either live (via live streaming) or on-demand and is available on a computer, mobile device or connected TV. As opposed to the ‘FTA TV’ (Free To Air) viewing received via an aerial, satellite or cable, i.e. any TV that is not viewed over the internet.There is no doubt BVOD viewing is going to continue to increase as consumers expect to view what they want when they want and internet connected TV usage continues to grow. Presently around 80% of Australians have a connected TV.For the Networks, the digital connection ensures BVOD delivers far deeper audience data and effectively allows them to charge more for that audience. The BVOD audience is usually 2-3 times more expensive than a FTA TV audience based on a cost per thousand. While FTA TV is bought on an estimated audience, BVOD is bought on a per thousand targeted served or viewed impressions. BVOD also allows the Networks to compete in the digital landscape by selling the airtime “Programmatically” as well as on a direct buy. When buying programmatically we can also follow an audience across networks and platforms.PwC estimates the 2020 BVOD advertising revenue will be around $200 million or 6% of the FTA TV revenue of $3 billion. There is definitely room for the BVOD revenue to grow as long as consumption grows.The BVOD audience varies enormously from program to program and is not going to be popular for all programs such as News, ACA or The Project. BVOD tends to be popular for the “tent pole” 7-8.30pm programs. Some of the larger BVOD audiences of late include 129,000 for SAS and 106,000 for Home & Away. These figures represent 12% of their FTA TV audience. Around half the BVOD viewing is on connected TVs, 14% on a mobile and the rest (36%) is shared between a PC/Laptop and a tablet.So, why would an advertiser want to pay 2-3 times more for an audience? Like all advertising, the value is in the impact an advertisement creates. As they say, not all impacts are equal and, in this case, a BVOD impact is greater than a FTA impact for the following reasons;
Roy Morgan Research claims 80% of people watched FTA TV in last 7 days and 27% watched BVOD in the last 7 days. With BVOD delivering record ratings and revenue to the Networks those percentages are likely to be getting closer together. Perhaps the most telling figure that BVOD has a bright future is the audience heavily skews younger with 52% being under 39 whilst only 26% of FTA TV’s audience are under 39.
The Jul-Sep20 Roy Morgan readership figures for Newspapers and Magazines have been released recently. Guess what – print readership is up! The big winners are the Sunday newspapers that are up a massive 22% in readership compare to a year ago. Interestingly they are also up 11% when comparing Sep20 quarter to Jun20 quarter. In other words, Covid to Covid. Across Australia, this translates to an additional 650,000 people reading the physical Sunday papers from a year ago. The Weekend Australian and Saturday’s Financial Review have also had huge readership increases with around 260,000 additional people reading those papers. Across the nation, Mon-Fri newspaper readership is up around 5% except for Melbourne which has been affected by their lockdown.Unfortunately printed Magazine readership didn’t do as well on a year on year comparison. However, from quarter to quarter, there were a number of successes in double digit readership increases. They include Womans Day, Marie Claire, Vogue, Elle, Frankie and Belle. Interestingly, in the midst of Covid Australians have turned to home improvements (Bunnings Mag is up 30.5%), cooking (Gourmet Traveller is up 64%), world events (Time is up 36%) and looking after their finances (Money is up 55%).
Firstly, what is Omnichannel retailing and why is it crucial for brands?Every brand wants each individual customer to have a seamless experience and relevant messaging throughout their sales journey. An omnichannel customer experience is made up of individual customer touch points, over a variety of channels that seamlessly connect, allowing customers to pick up where they left off on one channel and continue the experience on another. An omni-channel experience accounts for each platform (website, blog, Facebook, Twitter, etc) and device (desktop, mobile, tablet, Apple Watch, etc) a customer will use to interact with the company. That knowledge is then used to deliver an integrated experience.A good example is knowing a customer shops at a certain location and if a product is out of stock in that location you would not serve them an ad for that product. Or if a customer buys a particular product on a regular basis you would map out the appropriate time and creative to serve them an ad.In a “multi-channel” environment (what most businesses invest in today), the customer has access to a variety of communication options that aren’t necessarily synchronized or connected. Research shows customers that have had an Omnichannel retail experience are more loyal (up to 20% increase in return shopping trips) and more likely to recommend your brand to friends and family. In effect, they spend more!Organising Omnichannel marketing will require working closely with several departments (Product, Marketing, Sales, Customer support, etc) in your company. The following is a good place to start;
While the transition from single channel to multi-channel towards omni-channel isn’t easy, 2020 has seen many businesses embracing the change. There is no doubt that 2021 will only increase customer demand towards greater centricity and personalisation.
The October advertising spend figures are looking good at just 4.8% decline year on year. We appreciate declines are not great however this is the lowest decline in advertising spend since September 2019. Looking into November and December, SMI is suggesting that November could become the first positive month of advertising spend in two years.
The categories that greatly helped October were the Food/Produce/Dairy (+42% YOY) and the Alcoholic Beverages (+47%) categories. No doubt moving the AFL and NRL finals into October encouraged those two categories to increase their spends. ‘Retail’ spend was also up 7% presumably the start of the pre-Christmas spend. Metro TV was the stand-out performer with a $32.6 million (15.7%) increase. Again, the sports finals would be a big factor in this. Digital was next best at -0.4% with the Social sites having a massive 45.5% increase whilst Programmatic reduced by -28.2%. Programmatic trading has eaten into Content Site bookings for many years, and now SMI suggests the trend seems to be reversing with the ongoing decline in Programmatic now seeing the value of Programmatic spend fall below that of Content Sites. Radio was down -17.1%, Newspapers -25.4%, Outdoor -46.5%, Magazines -51.5% and Cinema -91.3%.
Everyone at Pearman wishes you a Merry Christmas and happy New Year!
WARNING – blatant promotion of independent advertising agencies to follow.
The ‘Independent’ advertising sector is doing very well at present and in the media space we are told the share of advertising billings has grown substantially to 20-25% of the ad pie. The Independent Media Agencies Australia (IMAA) celebrates 9 months on the 19th November and has already had its 50th member join. We know there are around 800 people working within those 50 members.That got us thinking, how many people work in independent advertising agencies in Australia? We estimate there are around 300+ independent media companies in Australia across full service (all media) and specialized (e.g. digital) categories. The independent creative advertising agencies would likely number a great deal more as there are few cost barriers in starting a creative company. Let’s assume there are 800+ creative agencies in Australia and that all the media and creative agencies range in staff from 1 to 100+ people. We also looked at IBISWorld who estimates the total Advertising Agency sector in Australia has 8,127 businesses and employs 16,600 people. An educated estimate has around 3,500 people working in independent advertising agencies in Australia. Or 20% of the industry based on IBISWorld figures.So, why does independence matter? Perhaps we are biased but we think the big three reasons are 1. Stability, 2. Being Australian owned and 3. Being Flexible & Decisive.Stability is a huge benefit to the staff and clients of independent agencies. There is no doubt the advertising industry is somewhat ageist and the independent agencies clearly employ most of the highly experienced people within the Australian advertising sector. The tenure of employment is also longer at independents giving the industry the stability it greatly needs. Clients benefit from staff stability on their business and the accumulated knowledge of what works and what does not. Interestingly, the ‘average’ time in business of the 50 IMAA members is 15 years. Independent agencies also tend to have multiple clients and less reliance on one client with many dedicated staff. When that large client moves, the employees are invariably the first casualties.Being Australian owned ensures major benefits in supporting the local economy. Primarily, the taxes and profits stay in Australia as well as the jobs. Independent Agencies are more likely to ensure jobs go to Australian citizens as opposed to flying people in from overseas.The independent agency’s lack of corporate structure and hierarchy delivers flexibility and speed in decision making. The only boundary an independent agency has are the ones that are self-inflicted. Independent Agencies are not governed by a faceless CFO based in London, Paris, New York or Beijing and therefore do not need to ask permission to get things done. For Independent Media agencies the flexibility also ensures they tend to be more accessible for the media vendors.Next year may be the Year Of The Ox but we’re hoping 2021 will be the Year Of The Independent. Here endeth the advertisement.
October was a month for most of the TV Networks to show us what they have install for 2021.TEN: Get the gold star for the most entertaining upfronts. Using the Wizard of Oz theme to reinforce their major shows will be filmed in Australia (‘coming home to Oz’ - get it). Survivor, Amazing Race and I’m A Celebrity will all be fimed in Australia for 2021. Network 10’s new programs include ‘Making It’ (think home handyman on steroids), ‘The Dog House’ (dog owners meeting their new four legged babies) and ‘First Inventers’ (ancient Indigenous innovations and discoveries). 10’s ViacomCBS influence can be seen with their streaming platform, ‘All Access’, now becoming ‘Paramount+’ and in terms of data they promoted their Viacom insights.
NETWORK SEVEN: Stated they were the network most affected by Covid but expect programing to be back on track in 2021. Hoping for a hole in one with their new putt putt golf obstacle course called ‘Holey Moley’ which will appear early in the new year. The Tokyo Olympics is due to start on 23rd July and will be followed by 10th season of The Voice (yes, they nabbed it from Nine). Their other new programs include ‘Ultimate Tag’ (a game of chase like you’ve never seen before), ‘RFDS’ (outback Aussie medical drama) and ‘Australian Gangster’ (a drama). Their Sport includes Cricket, AFL, the Olympics (inc. Beijing Winter in Feb 2022) and Supercars are back on 7. Their data is called ‘7RedIQ’ and claims to know more about their viewers what they do, think & feel.
FOXTEL: Was probably the most down to earth upfronts with lots of arm chair chats that included Shane Warne and Nicole Kidman. Their CEO, Patrick Delany, was particularly brave giving us a live demo of Foxtel’s ‘voice control’ where we’ll be able to ask the TV to change channels. It didn’t quite go to plan but he handled it well. In 2021, Foxtel are introducing a free version of Kayo (Freemium Kayo) which is effectively a watered down version of the paid for Kayo. Foxtel’s ‘Binge’ service, competing against Netflix & Stan, expects Nicole Kidman’s latest series, The Undoing, to be a big success for them. They also suggested ‘The End’ and ‘The Flight Attendant’ will be popular viewing.For data, Foxtel said their competitors rely on panel data and inference while their data is “second by second real time actions across 2.5m devices”. Foxtel’s data is called Foxtel Xplore.
Friday 27th November, note the date in your calendar, as this day now marks a bigger sales day than the traditional Boxing Day in Australia. Originating in 1869 and celebrated on the Friday following Thanksgiving in the US, Black Friday signifies the start of the Christmas shopping season, it has now evolved into a global retail phenomenon. But the bargain does not end there, directly following Black Friday is Cyber Monday. This event started in 2005 and is the online equivalent of Black Friday sales focussing on deals through online retailers. In 2019 Black Friday and Cyber Monday saw a 34% year-on-year growth in Australian online purchases whilst Covid has increased ecommerce in Australia by 30%+ over the last 6 months. So, to quote a literary great, Tina Turner, we can expect these upcoming sales to be Simply the Best. According to the US Business Insider, Black Friday sales favour the more expensive, high-end items and Cyber Monday skews towards gadgets and gifts. A spokesperson for Amazon confirmed that Black Friday in 2019 was the biggest sales day in Amazon Australia’s history. So, what does this mean for you? If you are looking to buy any big-ticket items, get ahead on your Christmas shopping or simply splurge that overseas holiday savings, then set the alarm for Friday 27th November. The sales this year are said to not disappoint with electronics in particular alleged to offer very attractive price-cuts. Our advice would be to do your homework as good deals get snatched up quickly. Remember to read the fine print because not all deals are good ones and if you’re an understanding employer don’t be too harsh on any sick days around these dates.
The September SMI figures are -24.3% compared to the same time last year. This looks somewhat worse than August’s -14.4% but realistically September has been greatly affected by the AFL and NRL finals being moved to October. If those finals were in September we would expect the Sept SMI figures to be similar to August (circa 15 to 18% down). So, it is fair to say, advertising spend seems to be continuing to recover. This is particularly the case when we know the October figures are looking to be down by low single figures and November is looking better again. If you’ve tried to buy TV in December lately you will know how well the TV stations are doing due to the lack of available airtime. Digital media was once again the best performing sector and only down -2.7%. Similar to last month, the Social sites (+43%) and Pure Play Video (+15%) were the best performing in Digital. TV was down -19%, Radio -27%, Newspapers -46%, Magazines -56% and Outdoor -62%. Unfortunately, Cinema is still in the worst position being down 90%. Within the major categories, Auto (-41%) and Gambling (-24%) had the biggest declines in activity while Government (+30%) continued its spending increase.
Coles will soon be selling $259 recycled iPhones
Given around 40-50% of every advertising dollar is spent online, the impending ‘cookie-less’ world (14 months from now) is a substantial issue facing the industry. A ‘cookie’ is a small piece of data stored on the user's computer by the web browser when a user visits a website. We all use browsers (Google Chrome, Firefox, Safari, etc, etc) to navigate the World Wide Web and each time we go to a website the browser keeps that information stored. Up until now, cookies have played a major role in digital targeting, measurement and strategy.Technically there are 1st party cookies which are set by site publishers once you visit and then there are 3rd party cookies which is what is being phased out. The 3rd party cookies are valuable as they keep track of a user’s history across the entire internet. The 1st party cookies track users across the publishers own sites and not where else they go.Losing the 3rd party cookies, without an alternative, means advertisers will find it more difficult to;
3rd party cookies have already been limited on the Safari browser (default for Apple) and Firefox. The Chrome browser representing 50%+ of all internet traffic, will follow and progressively block cookies on its users between now and 2022. Impressions, clicks & views will still be accurate but won’t deliver the same insights. For example, 5,000 weekly impressions could be 5 impressions to 1,000 people or 1,000 impressions to 5 people. For ‘Clicks’, the only attribution modelling you could do would be based on ‘last click’ attribution. Last clicks have been proven to have very low to no correlation with ad effectiveness for nearly 20 years. The race is now on to find an alternative to tracking behaviour on the internet.Perhaps the biggest reason an alternative will be found is it is financially advantageous to Publishers. Simply put, a Publisher can charge 4 times as much for a targeted / specific audience (measured by 3rd party cookies) than it can for a unmeasured ‘thousand impacts’. As you can imagine numerous digital players are currently working on a solution to prepare for a cookie less world. The Trade Desk is partnering with IAB, NAI and ANA to list a few in replacing cookies by another form of unified ID across the web. The Trade Desk is proposing consumers log into websites using their email and at the same time set their privacy preferences. These email addresses are then hashed and encrypted and will replace the cookie with a new common language for the ad tech industry. This ID Encryption Service will help provide a layer of security, accountability and consumer control that cookies presently don’t provide. The tracking effectively moves from browsers and onto people’s email & device ID. The diagram below best explains The Trade Desk’s proposal.
If you want to understand more about the implications of a cookie less world, the following link from the IAB Australia is an informative read. https://iabaustralia.com.au/resource/beyond-the-cookie-mapping-the-future-of-marketing-measurement/
Ch10 launched the latest free to air TV station on Sunday 27th September and it’s called ‘10 Shake’. It is Ten’s 3rd digital station (after 10 Peach & 10 Bold) while Seven has 3 ‘digi’ stations (7mate, 7two, 7Flix) and Nine has 4 (9Go!, 9Gem, 9Life & 9Rush).This new station has its origins in the CBS purchase of Ch10. CBS (now ViacomCBS) owns MTV, Nickelodeon & Nick Jnr and Ten has recently been selling advertising on those stations even though they appear on the Foxtel platform. Network 10 has the highest percentage of an ‘under 50’ audience (42%) and they say 10 Shake completes their Under 50 dominance.10 Shake daytime programs will be for kids (SpongeBob SquarePants, PAW Patrol, Dora The Explorer, etc) while night time will be focussed on “big kids” (Teen Mom Australia, Comedy Central Roasts, Drunk History US, Lip Sync Battle, etc). As kids programs attract very little advertising dollars it’s reasonable to ask why start a station dedicated to kids? Perhaps this is just a good way to launch 10’s fourth station with content that comes very cheaply for them and reinforces their youth appeal.
Although online shopping was steadily increasing before Covid-19, the effect of Covid has been far more widespread than anyone could have predicted. As bricks and mortar stores were closed, Australian ecommerce boomed with 5.1 million households shopping online in the month of April. Year on year, ecommerce has increased over 80%. In 2019, 1.6 million households bought something online each week while in April 2020 that figure rose to 2.5 million households each week. By the end of 2020, ecommerce is estimated to account for 15% of the total retail market (excl. cafes, restaurants & take away).The early adopters of online shopping primarily wanted cheaper goods although the post Covid online shopper could represent the rise of the convenience shopper, less price conscious and keener on customer service. They want it to be hassle free and for the items to arrive quickly. The unprecedented rise in recent months has shifted consumer behaviour to a stronger reliance on technology to undertake everyday activities, as well as a change in Brand Loyalty as many customers in lockdown were forced to buy through necessity rather than preference. The rise of the ‘Buy Now Pay Later’ services has also played its part by providing consumers with more affordable ways of purchasing online items. Interestingly the time of day for online sales has been spread out a bit more since Covid although the 7-10pm and 2-5pm areas still make up 50% of all the purchase times. Retailers have the unique opportunity of capturing this ever increasing online shopper if they can set up efficiently for ecommerce. A growing consumer base with an increased confidence in online shopping is now available, making this a perfect time to introduce ecommerce into your business if you haven’t done so already.
As they say, everything is relative in life. Although the August advertising spend is down by 17.2%, it is being touted as a good result despite it being the 5th worst result since 2007 when SMI started,. Probably because the 4 largest declines of all time occurred in the previous 4 months (Apr-Jul’20). Therefore, August is seen as the media agency market continuing to recover after Covid wreaked havoc on client’s advertising spend. The Digital media reported the most resilient result with bookings back just 4.7% as both the Social Media (+30.6%) and Pure Play Video Sites (+28.7%) sectors delivered strong growth. TV also reported a solid result (-11%) with the Metropolitan TV market delivering the smallest YOY decline of 10.7%. The recovery is underscored by the fact that more than a quarter of all SMI Product Categories reported higher media investment in August. Supermarkets, Health Insurance, Government, Health Care, Household Cleaning Products and Smartphones all delivered double digit growth, while Bank Brand/Sponsorship lifted 8%.
This week Facebook came out swinging (in the NY Times) against the ACCC’s draft code in what is looking to become quite a fight with the Australian Government. In a nutshell, the code will force Google & Facebook to pay Australian media companies (predominantly News Ltd & Nine) for using their news stories. Although this is local, it is seen as a test case for the world and has the potential to be adopted globally which is probably why Facebook announced their response in New York. Remember Australia leading the way with plain packaging cigarettes? As you would expect, there is an enormous amount of dollars at stake and potentially intellectual property for the tech companies. The consultation with the stakeholders finished last Friday so the next step is the release of final ACCC code. Facebook said it will stop the sharing of local and international news on Facebook & Instagram while Google says it won’t be able to guarantee relevant articles on Google Search & YouTube.Back to what’s at stake? News Ltd have said it is worth $1 billion however Google is talking about a $10 million figure. Only a $990 million difference in opinion! Presently the code gets each party to enter negotiations and nominate a dollar figure for what they believe the news content is worth. After 3 months of negotiations, each party submits a bid figure and an arbitration panel selects one of those figures that both parties must abide with. This makes it dangerous for either party to shoot too high or too low as they could potentially drive the panel to select the other’s bid. After 3 months of discussions and negotiations we assume the difference will be smaller than $990 million.As a mechanism to resolve a dispute, the code looks to be quite clever however perhaps the real question is why is it being proposed. The ACCC Chair, Rod Sims, said “there is a fundamental bargaining power imbalance between news media businesses and the major digital platforms, partly because news businesses have no option but to deal with the platforms, and have had little ability to negotiate over payment for their content or other issues”. The tech giants say they are a benefit to the companies as they send traffic to the news sites (2.3 billion clicks sent to Australian news sites from Jan-May 2020). While the news companies say the clicks are worthless as there is no data behind them and they can’t be sold to advertisers. So that still leaves the question of how much benefit is Google and Facebook gaining from the news stories. Only about 4% of Facebook’s News Feed is actually “news,” as opposed to posts from family and friends, while Google doesn’t monetize Google News and says that only about 1% of searches in Australia have anything to do with current events.The code only targets Google & Facebook (no mention of LinkedIn or Twitter) and for Australian media companies it excludes the ABC & SBS and any small companies with less than $150,000 revenue. The code also requires the tech giants to share algorithm changes and details on user data with the news companies. While the arbitration panel is told it must consider the direct and indirect benefits (whether monetary or otherwise) to Google & Facebook. That does seem to be quite a vague way of determining ‘value’. There is no doubt the news companies have suffered since the ’rivers of gold’ classifieds, job ads and car sales migrated to the internet and it is good to see Government trying to ‘balance the power’. The news stories on Facebook and Google do enhance the consumer experience and deliver more data to the tech companies however the question around how they monetise that is highly contentious. This will be fascinating to see how it plays out and who comes up with the bigger knife.
Covid greatly affected the media from April – June 2020 and therefore they had little demand and lots of supply. A great time to be buying advertising … if you were fortunate enough to be in that position. In addition to that, most of the media, except Outdoor and Cinema, had increased consumption which again made it a very opportune time to get tremendous advertising exposure.Looking at the latest SMI figures it is clear to see increasing advertising spend across most media. In particular, Television and Digital are in a substantially better positions than they were in May. Television’s demand has grown around 50% from May meaning their ‘availabilities’ have dwindled and it is now difficult to buy short term. TV buys now need to be done 4-5 weeks out to get the programs you want. Digital is somewhat less clear to see the ‘Covid’ benefits as much of it is auction based and ‘supply’ never seems to be too much of an issue. The ‘direct’ buys with particular websites have seen some good deals.The Oct-Dec run up to Christmas period is invariably in high demand and even in this Covid year we expect that to continue. There are absolutely still great opportunities to be had however they are possibly more likely to be in Radio, Outdoor, Cinema and Print where supply & demand works in favour of the advertiser.
Samba TV (https://samba.tv/) is a global technology company gathering TV viewership from users that voluntarily opt-in on their smart TVs (via the settings). They have deals with many TV brands including Sony, Sharp, TCL and Philips and have access to 35 million smart TV sets in the US and globally. The adoption is increasing in Australia with around 100,000 TV sets to date. The exciting news is that Samba TV has recently partnered with 2 programmatic leaders, The Trade Desk and MiQ, to allow advertisers to target an audience across multiple screens (TV, desktop, mobile, etc). This allows advertisers to follow an audience across linear TV, streaming services, Foxtel and video programmatic activity. This presents opportunities for media planning as we will be able to control the frequency / exposure of the advertising across multiple screens. Samba also determines exactly what has appeared on the screens so we could also target an audience that has specifically seen competitors advertising.For marketers, this unlocks unprecedented access and bridges the gap between digital and offline screen targeting further.So why would anyone want to opt-in to Samba TV? The main attraction resides in the personalisation of their TV viewership allowing them to get tailored program recommendations (similar to Netflix).In the months to come (Q4 2020 TBC), the targeting options will increase with the ability to target users based on specific program viewership or their watching behaviour (light viewers, tv bingers etc.).The long awaited promise of fluid offline and online screen integration is getting closer!
The latest SMI data is moderately good news as it is the lowest decline (-28.4%) since March. At this stage, the month of August is also looking better again. The 12mth year on year comparison shows the Australian ad spend is down-16.2%.
July was an improvement for Radio (-29%) but unfortunately Outdoor continued to have the highest decline at -66%. TV (-23%) and Digital (-16%) continued to improve their advertising income as did Newspapers at -38% and Magazines at -60%. Despite Cinemas opening again in July the ad revenue was slow to follow although the closure of Victoria did not do them any favours. On a positive note, Cinema has a lot of ‘blockbusters’ to cram into their schedule between now and Christmas. ‘Reail’ is the second largest category and the good news is it is beginning to stabilise and was only down -3.8% compared to July’19. The bad news is that the largest category, Auto, was down the most at -52%. Perhaps the stockpiling of toilet rolls has run out as ‘Toiletries / Cosmetics’ was up +21% and of course the Government continued to increase their spend with a +38% increase
It is no secret that the print media has suffered horrendously since Digital rolled into town however the last three months has been particularly bad for them. Perhaps it was always heading this way and Covid simply fast tracked the inevitable.
In late May, News announced it was closing the printed editions of over 100 Suburban and Regional papers to move them to Digital only editions and 14 were simply closed. These closures represent around 20% of all newspapers in Australia. Printed newspapers have been struggling for some time with advertising revenue through agencies more than halved over the last 5 years from $550 million to $250 million per year. At least Newspapers seem to have been recouping around 60% of the lost print advertising through their digital advertising sales. They are also gaining income from digital subscriptions and have the benefit of being backed by some of the biggest media players – Murdoch, Stokes & Nine. The recent ACCC rulings for the big tech companies to pay for news content should also be a bonus for newspapers.
Magazines have possibly been in a more vulnerable position than newspapers as they coped with the Digital onslaught, competition from newspapers introducing lifestyle / magazine sections and (in hindsight) not choosing the right digital strategy. The Magazine sector’s advertising revenue has been hit harder than newspapers as 5 years ago it was around $147 million and today its $64 million. That is about the same amount that James Packer paid for his unit in Barangaroo (wonder what Kerry would think). The fallout from all of this was seen last month as Bauer Media (now owned by Mercury Capital) closed 8 magazines - Harper's Bazaar, Elle, Men's Health, Women's Health, InStyle, Good Health, NW and OK. They also moved Girlfriend to a digital only title. Many of these magazines had expensive global licenses attached to them which would have contributed to their demise. Even though it seems there was consumer demand for the 8 deleted magazines (they were read by around 1.2 million people), clearly they were not able to be profitable. With the benefit of history, we can see that Bauer’s decision not to use the heritage of their magazines mastheads for digital editions may not have been a good move as they wrapped up all their mastheads into www.nowtolove.com.au and www.homestolove.com.au
All these deceased print publications have left many clients searching for ways to effectively reach their targets. The suburban papers serviced an important local market for clients who want to reach a specific geographic target. While burying those magazines has left a big gap for Fashion and Health related clients.
Hopefully, this ‘rationalisation’ will put both the Newspaper and Magazine sectors into a healthier situation so that they can prove there is an afterlife.
In the free to air TV world, supremacy and bragging rights are fought out in ‘Peak’ night time of 6pm-10:30pm. A mere 31.5 hours of content weekly. However 10.5 hours are already spoken for with News and Current Affairs (with Network 10 a little different). The crucial 7.30-9:30pm period is what the networks concentrate on to compete with ratings and stem the leak of FTA viewers to Streaming services. Live sport takes up some of this but then it is over to the ‘tent pole’ programs to bring home the bacon!
This year it has been interesting seeing the Seven Network resurrect old formats. First came the 12th season of Big Brother that had previously been on TEN for 8 seasons (2001-2008) and Nine for 3 seasons (2012-2015). Surprisingly its revival on Seven seems to have been a success with ratings 10% above the last season and attracting younger demographics for Seven. Something Seven had struggled to achieve at 7:30pm. We know it has worked as Seven has now renewed it for another series next year. The next big test is the revival of The Farmer Wants A Wife. Nine ran 8 episodes between 2007-2012 and then had another crack at it in 2016. After 9 marriages and 20 babies, Seven has just started airing the 10th episode. The initial ratings look like it could be a success as they are 20% above the 2016 ratings.
You may have heard that the ‘Black Lives Matter’ movement encouraged a July Facebook boycott by a number of large clients (Coca Cola, Unilever, Starbucks, Honda, etc). The idea was to put financial pressure on Facebook to stop displaying hateful content. At the time some media had headlines saying this would “slash Facebooks advertising spend” and that it had cost Mark Zuckerberg $72 billion (due to a drop in share price). As good intentioned as the protest may have been, the ‘hurt’ has definitely not lived up to the headlines.
Facebook’s share price today is 13% higher than it was in early May 2020 or put another way, its market capital grew by $75 billion in 3 months. The company’s ad sales in the first three weeks of July also grew 10% year on year. Facebook’s monthly active users were also up 12% year-on-year to 2.7 billion. With much of the world in lockdown at home it is no wonder consumption of their platform has increased. Interestingly Black Lives Matter has a Facebook page with close to 700,000 followers and many would have been active in July.
The protest has drawn attention to the real strength of Facebook which is its massive long tail of businesses all contributing to its $70 billion annual revenue. 98% of that is from advertising. Facebook has millions of advertisers with small to medium sized businesses making up 76% of all its advertising revenue. It is estimated around 1100 companies joined the boycott which effectively became a symbolic gesture.
Facebook’s real threats are twofold. 1) Politicians thinking they have too much power and 2) a potentially ageing customer base.
Facebook (as well as Google, Apple & Amazon) have recently had the US Congress accusing them of using their market power to crush competitors and distort the political debate. In Australia, last week the ACCC released a draft code forcing Facebook and Google into a negotiate-arbitrate model to compel them to fairly pay Australian media companies (mostly News & Nine) for the use of news content on digital platforms. Of course, the biggest threat to Facebook could be that Generation Z does not want to see their parents on the same social platform as themselves.
The latest SMI figures for FY20 show the worst year ever for media advertising spend as it is down by more than $1 billion dollars compared to FY19. Although June’20 bookings were down 35.7% compared to June’19 it could be viewed as positive as they were expected to be 40%+ down. June is also an improvement on the April and May figures. SMI also has insight into forward bookings and they are showing an improving market. Overall, FY20 was a 14.7% decline compared to FY19. The Sydney agencies had the lowest decline of the 5 capital cities.
Outdoor continued to have the highest decline of any media at -66% for the month. Magazines were close behind at -62% and Newspapers were -47%. Radio improved a bit from May being down -43%%. While Television was down -34% and Digital -20%. For FY20 the only major product categories showing any growth compared to FY19 were Insurance at +5.3% and Domestic Banks at +0.4%. The two biggest categories of Retail and Automotive Brands were down -13.3% and -23% respectively
That was Gordon Gecko’s motivation (from ‘Wall Street’) to convince shareholders that his way was going to put cold hard cash into their pockets. It could be suggested not a lot has changed since that 1987 movie with ‘share price’ being the main and most compelling measure of a company’s success. Share prices now make the nightly news and are relied upon by tens of millions of investors, especially retirees looking for dividends. Companies also rely on their share price to raise capital when issuing more shares. Perhaps the biggest driving force for a high share price is many senior management positions have stock options based on the performance of their company’s share price. Unfortunately, stock options can cause management to focus on short-term performance or to manipulate numbers to meet targets.
So where do the people who make the profit (aka the employees) rank compared to the share price? Sadly, the answer is probably not too high. Companies obviously need to ensure they are financially healthy to keep employees in jobs but how much profit is enough? It seems the system we have puts enormous pressure on CEOs, CFOs, and other corporate leaders to move heaven and earth to keep their share price high.
The “triple bottom line” (TBL) was coined in 1994 and aims to measure the financial, social, and environmental performance of a company. The three elements being profit, people and the planet. The idea is a company can be managed in a way that not only earns financial profits, but which also improves people's lives and the planet.
The TBL seems to have come in and out of vogue and only for a short period become mainstream. For independent companies, with a handful of shareholders, it is probably easier to put the TBL in place. For listed companies, the only hope are the investment firms that control enough of a company to ensure management take notice. Interestingly the world’s largest investment firm, BlackRock, seems to have done that recently. BlackRock have $10 trillion in assets under management (yes, trillion) and has put climate change at the centre of its investment strategy. They have said they will abandon companies heavily invested in thermal coal and demand that companies report their exposure to climate change risks, their contribution to emissions and their plans to reduce them. In Australia, the $52 billion HESTA super fund has also divested holdings in thermal coal companies.
It’s great to see large investment firms looking after the planet although wouldn’t it be fantastic if employees were prominent in the triple bottom line as well. Companies rarely grow on the back of unhappy employees. It’s the commitment and talent of employees that power most successful companies. Any good manager knows staff motivation is crucial in the financial health of a company. This is particularly relevant to acknowledge today given the number of retrenchments in the news of late.
Naturally companies need to be profitable although a sole focus on the P&L or balance sheet must surely breed more Gordon Geckos. What a wonderful world it would be if all companies adopted the triple bottom line so that staff and the planet are also looked after!
Around 80% of cinemas are opening today (Thu 2nd July) in time for school holidays. The initial movies will be a mix of recently released movies and classics (eg. Harry Potter) along with reduced pricing.
After July there will be many blockbuster movies crammed into 5 months from Aug-Dec’20 that were due to be released pre-covid 2020. Some of the big movies coming our way are Tenet (13th Aug), Mulan (20th Aug), Wonder Woman 1984, Bond ‘No Time to Die’, Black Widow and Top Gun Maverick.
The audiences are anticipated to be 50% of Pre-Covid averages across the Jul – Sep quarter and then returning to 85% during the Oct – Dec quarter. Interestingly NZ has been re-opening for the last 6 weeks with 95% of Cinemas open and audiences have been growing at an average of +73% week on week over this time.
Amazon started life as a book reseller and now sells virtually anything online. While many companies are still coming to terms with the impact Covid-19 has played on their industry, the American giant continues to slowly but surely cement themselves throughout the digital advertising marketplace.
In the US, Amazon now receives around $12 billion p.a. of the digital advertising spend. They sit only behind the digital ‘duopoly’ of Google and Facebook. Their increased presence in the US market doesn’t stop there as many surveys have shown that the site is number one for product specific searches throughout the US, with up to 55% of consumers saying they still start a product search on Amazon.
Having only just started in Australia a few years ago, Amazon doesn’t quite have the same presence they do in the US, but they are slowly starting to get a foothold across the Australian retail market. Over the last 6 months the Australian site has seen around 26.5 million visits. Recently, Amazon has also announced a $500 million investment in a new Western Sydney distribution centre that will house around 11 million different products. This should go a long way to increase their delivery speeds.
With an increase in fulfilment centres and the introduction of Amazon Prime, the company is looking to drive more consumers to the site and become the ‘one stop shop’ for online retail products. Something that is not currently seen in the Australian retail market. As Amazon’s market share increases throughout the Australian digital landscape more opportunities for advertisers will follow from a bigger database of consumer habits.
The latest SMI figures show May’20 is down 40% compared to May’19 as the full impact of Covid is being felt. The early June figures also show a 40%+ decline in spend putting the industry on track to a record quarterly decline in Q2 (Apr-Jun) of about 43%. In dollar terms this decline represents a staggering $700 million loss of media investment or circa $70 million of potential media agency revenues. However, SMI’s data shows future demand returning to more typical levels in July and August.
Outdoor had another painful month with -71% while Radio was not far behind with -56%. Television was down -36% and Digital was -26%.
In this desolate environment, the only major product category reporting any growth is Domestic Banks with their total bookings up 6.2% in May. Among smaller categories there has also been growth in the In-Home Entertainment and Household Supplies categories. But unsurprisingly large categories such as Automotive Brand (-62%), Restaurants (-43%) and Clothing/Fashion Accessories (-76%) are reporting significant declines. And the Travel category, which in May 2019 was the market’s fifth largest, has slumped 92% to now sit in 30th position.
Whilst on the subject of Programmatic, it is the latest thing to hit the Outdoor medium. Just when you thought you were safe from acronyms, the Outdoor industry has introduced DSPs, SSP’s and pDOOH (programmatic digital out of home - in case you didn’t know). pDOOH uses audience data from device ID information (computers, mobiles, etc) to identify behaviours and then analyses the movement patterns of those device ID's and identifies the individual screens that fall within the movement patterns. Therefore the data is still based on a trend and likelihood of a consumer being in front of a sign, not a particular person.How it works is the Outdoor companies allow Ad Tech companies (eg. Vistar, Hivestack, etc) to sell specific digital sites on their behalf. Clearly they are sites that the outdoor company has not been able to sell in the “traditional” way. At present a number of Outdoor companies are trialling pDOOH although oOh! are not part of the trial. The media agencies buy pDOOH from the Ad Tech businesses, not the Outdoor companies. The biggest difference is the Ad Tech companies sell it on a ‘cost per thousand’ impressions reached as opposed to by week or by month. To determine how many people have been reached at an exact time is certainly questionable in this whole process. Outdoor is a ‘one to many’ medium which does make it somewhat difficult to charge based on specific target CPMs.pDOOH’s advantage is sold as better targeting, greater flexibility (can easily move or pause a campaign) and ability to buy across all Outdoor companies. On the down side, pDOOH has limits on available inventory and is less likely to factor in the quality of each site. The vast majority of clients buy Outdoor for a mass reach and strong branding so seeing the environment before buying is extremely important.In 2019 pDOOH accounted for around 2-3% of all Outdoor spend in the U.S. (after 8+ years in market). In Australia it is presently accounting for possibly 0.2-0.4% of spend.
In the 1800s John Wanamaker (a successful US merchant) is alleged to have proclaimed, “Half the money I spend on advertising is wasted, the trouble is, I don’t know which half”. We know advertising works however determining exactly which placement or why certain advertising worked remains the holy grail. The growth in data and attribution modelling certainly helps but it is still not an exact science and sometimes all the data makes it more confusing.The first step to establishing effectiveness is to know who has seen the advertisement. For Offline media, we use research such as Morgan (print), OzTam (television), GFK (radio) and MOVE (outdoor) to determine who has the potential to see an advertisement. The systems cannot be exact although the good news is Australia is ahead of most of the world in terms of the quality of research and survey sample sizes vs population.Once we know who is seeing the ads, we then need to ensure the advertising appeared as booked. For most media there are third party companies that can verify the booked media did in fact appear. On very rare occasions an ad may appear in print that is not legible, or a TV ad is cut short or an Outdoor ad is not posted properly. These cases are very rare and generally have an extremely low effect on any impact. In addition, advertisers naturally get compensation if that happens.For Digital advertisements, determining how many people have the potential to see advertising is more of an exact science than offline media. Meaning digital is measured on a one to one basis as ads are served to specific digital screens. It is also possible to use an independent third party for impression measurement by using an adserver such as Flashtalking for delivering the advertising to the digital screens. Naturally, the big caveat with digital is “potential to see” as the medium is more susceptible to fraud than offline media. A bot used to be something you sat on but now is enemy no.1 for digital advertisers. Bots generate fake browser data and create fabricated URLs which effectively means no humans are seeing those impressions. Programmatic buys are particularly vulnerable to bots. A recent report from PwC and the Incorporated Society of British Advertisers (ISBA) said 88% of advertising impressions could not be fully traced through a spaghetti map of programmatic suppliers and operatives.Perhaps the question should not be who is seeing the advertising but how effective is the advertising? That is where digital has a perceived advantage as it is accountable through clicks. That also explains why Programmatic advertising can be somewhat vague as it tends to deliver the lowest cost per clicks even if half the money is wasted. Of course, the most important question is what drove someone to click so you can attribute which half of your advertising worked!
The privacy concerns around how personal data is being used in the Digital world has ramped up enormously since the Cambridge Analytica data breach in early 2018. The cookies attached to ads to track where people have come from when they arrive at a website will soon be a thing of the past. Users on the Safari browser (the default Apple browser) and Firefox can already no longer be targeted based on their previous site visits (which impacts mostly retargeting and prospecting tactics for display and video activity). Chrome browser representing 50%+ of all internet traffic, will follow and progressively block cookies on its users between now and 2022. Effectively it will be a cookie-less world in digital with no information stored from people web browsing behaviour (interests etc.).This will mean knowing who has come to a website or retargeting and attribution reporting is going to get a whole lot tougher. Retargeting people who have been to a website has often been the best performing digital tactic for acquisition. It will soon become difficult to build a remarketing audience based on people who have visited your website without completing any trackable action. Facebook retargeting will remain available. In terms of attribution, there will be an increase in unattributed conversions as landings to a website cannot be tied back to users. This will lead to the undervaluing of display and video activity in attribution modelling. Reach and frequency modelling or frequency caps will also be greatly affected.Before most of the cookie data is cut off it is very important to prepare for the cookie-less world and enact the following.
The latest SMI figures show April’20 is down around 35% compared to April’19. While March was down 10.6% there was talk that April could decline by 40-50% so perhaps April is not that bad. It is likely April will be the month most impacted by Covid so May and June may be down 20-30%. From Q3 (Jul-Sep), there is a general feeling that things are getting better and it will be a big improvement on Q2 (Apr-Jun).Cinema was most affected due to not being open. Outdoor suffered greatly(-60.6%) as April was the height of lockdown and people were not moving around as much. Magazines (-51.8%) were next although ad spend is likely to get worse for that sector as it suspended many titles in May. Surprisingly, Radio was next worse at -43.7%. Radio tends to carry a lot of direct and smaller businesses who have suffered most during the lockdown. Digital, Television and Newspapers were down 25-35%.Auto (-46%) and Travel (-77%) once again showed the biggest declines. Whilst Domestic Banks (+16%) and Government (+20%) certainly helped the market.