Consolidation, programmatic and advertising's great renaissance - media agency predictions

By AdNews | 16 December 2016

Media agencies have been under enormous pressure in the past year battling a merry-go-round of pitches, tighter media budgets and some advertising bodies raising questions about media buying transparency and client relations.

Agencies are sometimes caught in the cross hairs of a brewing war between digital and traditional media players while media fragmentation and changing consumer behaviours are adding complexity to the mix.

So what do media agency bosses think will be the biggest industry issue of 2017?

Many predict consolidation across the media landscape is inevitable while data and programmatic buying will continue to grow in importance.

The internet could take its first major media scalp while one agency leader predicts we are entering The First Great Advertising Renaissance.

Mark McCraith, CEO, Mauxus

"2017 will see the return of Television or screens as we now know it. Free-to-Air to grow along with Foxtel as TV is still the most powerful tool at stimulating the marketing funnel. Media that is not measured or audited properly will come under increasing scrutiny e.g. Facebook and now Bauer, we need the transparency and accountability  accountability.  They will lose money from advertisers who can't trust internal metrics. The rise of the bespoke advertising model to help clients move faster and more efficiently."

Paul Brooks, CEO, Carat Australia & New Zealand

“My prediction for 2017 is not only a prediction but a plea to the advertising fraternity. 2016 has been a divisive year; not just in the world of advertising but more broadly around the globe. The Australian election, UK Brexit vote and the recent race for US Presidency has shown just how divided these nations are in the political, economic and cultural spectrum. I can’t help but believe that this has also had an impact on adland. Brand V performance, digital V television, effectiveness V efficiency, media V creative, google V facebook, network V independent, human V robot, radio V streaming; the list goes on! We have become obsessed with creating a war and choosing option A over option B.  2017 is the year for embracing integration and collaboration to deliver better outcomes, superior work and build a stronger, optimistic advertising industry together."  

James Simmons, COO, Match Media

"Acquisition and liquidation will be ever present for global and local players. Marketing spend is increasing in low single digits with significantly more pressure on understanding ROI. We will see consolidation in the Adtech into Martech world (see Krux and TubeMogul this year) as the industry demands more transparency, simplification and understanding of who their customers are and how best to acquire and retain them. There will also be consolidation amongst the local media owners as pressure increases to get a bigger share of wallet, those that don’t may find they do not have a sustainable business model." 

Lee Stephens, CEO, Switch Digital

"The Internet will claim its first major scalp with Fairfax breaking up into at least three parts. The mastheads and the community newspapers will break off.  The community papers will likely be on-sold to News Limited as there is little conflict with their current newspapers. Domain will be unbundled as a public company, with a long-term marketing agreement from the mastheads. The AFR is an ideal private equity target due to its extremely valuable asset in its subscriber database."

Jimmy Hyett, managing director, Media & Production Partners

"The age old marketing rule of 80/20 (80% media budget to 20% creative budget) will be thrown out the window thanks to the importance of content and making a connection with the audience. Creative budgets will overtake media spend proving that the current agency model is fast disappearing…It will take guts for change or a new breed of agency to deliver what clients really want and need to grow their business." 

Ricky Chanana, national head of investment, Maxus
"We will continue to see more tech partnerships and less media partnerships in 2017. Speed will become the new currency as automated, dynamic trading plays a key role in the new year and beyond. Audiences will continue to fragment which will place even more pressure on networks to deliver across multiple devices. Big budget clients will ask for more solus agency led solutions encompassing creative, media and PR. And finally, 2017 will see the knock on effect of the big mergers such as Yahoo and Verizon, APN and Ooh, Microsoft and LinkedIn etc. These mergers will either work like avocado and feta or fail like Vegemite and honey."
Ashley Earnshaw, chief investment officer, Carat Australia

“I think in 2017 the bar will be raised for content partnerships as advertisers work with media partners on richer sponsorship and integration opportunities. Creativity will be balanced with accountability. Next year will be the year successful media agencies adapt their structures, offerings and ways of working with clients. A new balance between procurement requirements and true ways of adding business value. 2017 will be the year where data and technology powers implementation and investment on a larger scale than ever before. Media reform will bring greater opportunity for clients to forge deeper value partnerships, across wider and richer local publishers. The balance will be addressed with global players”.

Sarah James, chief digital officer, Carat Australia

“Programmatic will increase x2.5 times in size by the end of 2017.  We are at the edge of change as technology scales and infiltrates other media channels, leading to changes in the way that agencies, publishers and clients structure their business.  The intersection between data and creativity is continuing to close…. Agencies are utilising data and insights into consumers faster and more effectively to better target the right person, in the right context, with the right message.”

Sam Hegg, chief strategy officer, Carat Australia 

“In the wake of the US Election result where the media commentary that existed within a bubble didn’t empathise or present the views of a forgotten majority, the lessons for our industry are that diversity of experience and background in agencies are essential for true cultural insights for our clients. The hot topic of 2016 – diversity, will evolve beyond a gender conversation to that of age, socio-economics, ethnicity, sexual orientation and more...”

Simon Rutherford, CEO, Slingshot

“I am loathed to make a prediction, because as an industry we are renowned for then making it the "year of” something....the year of Big Data, Attention Metrics, Social, Mobile, Video, integrated marketing, customer experience design, or maybe even the year of Chatbots. If I was forced to make a prediction, it would be that the marketing industry will get distracted by something new and shiny in 2017, because we can't help ourselves. The reality is marketing fundamentals haven't changed in 50-60 years. We have an audience we are trying to connect with a brand, we have a moment in time to make that connection and we have a brand story to tell them. Everything else is either a strategic consideration or a new channel in an ever fragmenting marketplace. So, I hope, like we will be with our clients, the industry can focus, apply strategic rigour to our respective clients’ businesses and not be distracted by the latest shiny thing in 2017, bring on the "year of focus".”

Rachael Lonergan, head of strategy, Foundation

"I predict we’ll see agencies focus more on helping drive growth for existing clients, taking a longer-term view of how to achieve business objectives and brand relevance into the future. Agencies need people in place who can talk about the whole of business, and not just media metrics. The large consulting firms are all over this space so agencies need to quickly skill up and understand where their competition for being in that trusted adviser role is coming from."

Adrian Mills, managing director, McCann Melbourne 

“The top creative agencies will continue to encroach upon the pure media strategy and buying players. At the same time, more client spend will go through internal media resources. Either way, to succeed long term, agencies will need to be more integrated and more strategic.”

Jason Dooris, group chief executive officer, Atomic212

“The world is entering a revolutionary phase. People are saying 'no' to greed, 'no' to corruption, 'no' to dishonesty. We are entering what I like to call The First Great Advertising Renaissance, a time where we will see a resurgence of absolute learning and innovation driven by a media savvy consumer, by technology that enables micro niche targeting and finally by brands and agencies that are prepared to invest in messaging and executions reflective of this deep knowledge they have about each individual consumer.” 

Stephen Fisher, GM, Hatched Media

“At both marketing and board levels, businesses will demand even greater effectiveness in their marketing, which is going to force a real shift in how agencies operate. In 2017 trust, talent and accountability, not volume, will rule. We’re going to see clients getting much more active in their relationships with their agencies. They’ll no longer accept “off the rack” offerings, but actively cherry picking partners to build made to measure teams that deliver on their very specific and individual needs.“

John Preston, CEO, Match Media

“There will be ever-increasing pressure on transparency, the continual consolidation of media agencies and media owners. We all want access to individual audiences and that comes through consolidation and access to data across less media owner platforms. For me it’s about the simplification hopefully of a very complex world by dealing with fewer media publishers and owners going forward."

Simon Ryan, CEO, Dentsu Aegis Network ANZ

"We will see the some of the major global media and retail organisations having significant impact on business in Australia. Amazon will launch with a flow on impact on bricks and mortar retail. The online classified sector will be challenged by Facebook employment, while eBay will experience significant pressure from competitive Amazon and Facebook offerings.  

Data connections and programmatic trading will be a major focus for agencies and media. In particular with TV and screens, we are looking forward to smarter ways to target to trade across their online and offline platforms. 

The media agency market will grow by 5% with online, OOH and radio enjoying most of the growth.

With media laws to change leading to further media consolidation and the entry of overseas investment partners, the landscape change dramatically including new mergers and acquisitions within Australia. An exciting time!" 

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