The Debate Rages
By Paul McIntyre:
At 9.40am last Friday a highpowered line-up of TV broadcast executives and top media agency bosses stepped on stage for the much anticipated “Screen Wars” session at the AdNews Media Summit.
Boy, what a difference three weeks makes for love and peace in TV land.
Earlier this month Danny Bass – GroupM’s then chief investment officer before later being unveiled as the next CEO of IPG Mediabrands – ignited an explosive debate when he said 2015 was the year the “model breaks” for linear TV. Bass was going to open GroupM’s $1 billion TV advertising pool to online video players and even digital out-of-home networks. TV broadcasters were furious.
On stage during the Screen Wars session, it was indeed furious – furiously close to a hippie love-in. There were a few breakouts but Seven, Nine and Ten were talking up their intent to push quickly beyond linear – Seven even announced a new mobile TV initiative during the Screen Wars session.
The free-to-air and pay TV sectors were linked arm in arm and the FTA networks, who media buyers say have been dragging their feet on digital distribution, were all-in on the TV anywhere movement and advertising-supported video on demand (AVOD).
Some argued afterwards that broadcasters were running scared and did not have the appetite for another fight, but there was some interesting debate. Linear TV was not dying, it was already dead, declared Network Ten’s chief digital officer, Rebekah Horne. Ten Play, she said, was just a “trojan horse”, for the bigger distribution changes that are coming.
Elsewhere, IPG Mediabrands CEO Henry Tajer warned that current media regulation threatened to unravel the media industry as we know it and needed a major shake-up.
In the Investment Seers session there was an intriguing account from Carat CEO Simon Ryan on how the agency retained the Woolworths media business – a good part of that, Ryan said, was about reworking strategy, budgets and efficiencies into Woolworths “owned media channels”.
On the Technology and Platforms panel Deloitte Digital called for closer alignment between the digital business “transformation” programs that are being deployed across organisations by management consulting firms and the marketing and media industry agenda – a hot point, given the data-driven imperative to create a single view of customer activity. Foxtel’s marketing and sales boss, Ed Smith, lit up the conference with his public concerns about media agency models and the impartiality of their advice.
And, tellingly, despite the enormous push by brands currently to swing marketing investments in their own media channels, Tourism Australia’s CMO, Lisa Ronson, said she was now investing more back in paid media channels.
Much more debate is to come from this year’s Media Summit, but for a topline account of the sellout event, read on.
Technology and Platforms
The Technology and Platforms session proved everything’s not just about ad tech automation and programmatic trading, but that brands are investing massively in marketing technology and bringing it inhouse.
The panel kicked off with the agency vs consultancy discussion, and Peter Bonney, director at Deloitte Digital, admitting that there was plenty of overlap in skills.
“[Marketing and technology] have to be hand in hand as the actual technology platforms themselves are built at such a rapid pace, and they evolve at such a rapid pace, that the rate of change of technology almost outpaces how fast you can deliver them,” Bonney said. He went on to say that “data is king and analytics is king”.
On the subject of moving tech inhouse, Ed Smith, marketing director at Foxtel, threw out a few grenades towards agencies, saying that one of the reasons agencies were under profit pressure was that “they acquire a whole tonne of inventory at a very low cost, add in a veneer of targeting and mark it up and sell it back to us”. He said that while still efficient and making sense on a cost per basis, in principle it just felt “wrong” to him as a marketer.
“I’m paying somebody to employ people to give me impartial advice to grow my business and they are buying stuff and marking it up five or 10 times and selling it back to me. So I thought: ‘Well, we can do that and then we can look for a media partner who actually can help us do what we do – but do it better.’”
Monique MacLeod, general manager consumer marketing at Commonwealth Bank, which is in the process of bringing programmatic in-house, stressed that its first-party data was the most important thing to it and having this remain within its remit, in its full control, was vital.
MacLeod also argued that agencies still play a critical role and that CommBank is still heavily dependent on them.
As the only agency representative on the panel, Starcom MediaVest CEO Chris Nolan said the agency’s job was very much to take what entrepreneurs and innovators have created – the pieces of technology – and stitch them together to create business solutions.
“Even though advertisers will bring aspects of technology or media in-house, I still think there is a really important role for agencies to bring new solutions – to ensure the programmatic world works more efficiently and more effectively,” he said.
Qantas and media: 'We want a seat at the table'
Qantas’ emerging data powerhouse, Red Planet, will place it in competition with many of its traditional media partners, but top marketer Olivia Wirth said the brand “wants a seat at the table” as a media company.
Wirth was speaking alongside Telstra group managing director, media and marketing, Joe Pollard were both speaking about the role of brands within a disrupted media landscape.
Wirth said Qantas has a “phenomenal” amount of customer insights, with 50 million passengers, 10.7 million frequent flyers members and 27 years of data on its customers.
She said there had been a lot of discussion about what to do with that data as “an airline, a lifestyle brand and a loyalty program” beyond just having a better asset to understand customers, which led to the creation of its Red Planet business.
“Red Planet is integrating our research analytics and our customer data into one – essentially taking our knowledge of the offline behaviour of our customers and combining it now with online,” Wirth said.
“We may have a business that is potentially a competitor to organisations that we’re in partnership with, but ultimately the market is big enough for all of us. We believe we want to have a seat at the table both as a partner, and as a media company.”
Pollard said that, in her role overseeing both Telstra’s media and marketing sides, the relationship with agencies changes with different perspectives, but more often than not she views it as a partnership with agencies.
“It’s interesting with the portfolio that I oversee, you’re a big customer of media companies, or more like a partner of media companies, and in some instances we compete.
“But where I look at it, there is probably more upside than downside. Given that we’re a telco and we’re not a big producer of content ourselves, we have to partner with people in order to produce that.”
However Pollard, who was previously CEO at Publicis Worldwide Australia, said that when it comes to marketing, the need for third-party expertise remains core.
The frustration felt by TV networks with what they see as an almost draconian regulatory environment was brought into sharp focus during the AdNews Media Summit’s Screen Wars panel, with Nine’s Peter Wiltshire, Seven’s Clive Dickens and Ten’s Rebekah Horne representing the TV networks.
The lack of progress from the Government on cross-ownership media laws, the two-out-of-three rule, and the 75% reach rule are, according to Nine’s Wiltshire, a frustration as the industry attempts to bring more digital services to the fore.
“From our perspective and everybody’s perspective ... I don’t think we can be accused of not embracing the screen environment we are moving into,” Wiltshire said.
“Under the current legislation, we are not able to stream content live into regional Australia. If the Government came around to allowing the 75% reach rule to disappear [it would] take us to a whole new place.”
The free-to-air players, amidst the regulatory quagmire as they see it, are dealing with a rapidly fragmenting market as subscription-video-ondemand players – such as Netflix, Stan, and Presto and tech heavyweights Facebook and YouTube – make a play for more advertising dollars.
UM CEO Mat Baxter lamented the subsequent fragmentation of TV land as detrimental to consumers.
While it could be argued that the fragmenting created more competition for media agency’s budgets, Baxter said the fundamental weight of TV was under threat.
“It would be much better in Australia, given the size of this market, that we have one united platform that everybody can plug into,” Baxter said.
Nine’s Wiltshire was quick to point out, however, that the TV networks would never be able to enter into such an arrangement because the regulators would have a field day.
“Don’t you think we thought about that? We can’t put our content in a central AVOD platform because the ACCC would have a great deal of trouble with us coming onto the same platform... because how would you control price?”
OMD CEO Peter Horgan said it was important TV networks were able to maintain scale, because it was the key selling tool for advertisers.
Follow the money is a common cry – but where is the money going? The shift towards paid, owned and earned channels has been bubbling under, and PwC predicted recently that ad dollars will remain sluggish as more dollars move from paid into owned. The Investment Seers panel at the Media Summit looked at what was driving that shift and how media agencies and owners are adapting.
It’s far from the death knell, though, according to Katie Rigg-Smith, CEO of Mindshare, who reorganised her agency around paid, owned and earned two years ago to “future-proof” it. She revealed that 40% of the agency’s business was now coming from activity around “owned channels” of client brands, rather than paid media.
However, she said there needed to be “a grown-up conversation” with clients about it, because just as people avoid ads they would – in time – avoid earned assets. “Just because you build it, doesn’t mean they’ll come,” she said.
Simon Ryan, CEO of Carat, was bullish on agencies needing to update skill-sets and mindset to fall into line, crediting that action for his agency’s retention of the Woolworths media account.
Tourism Australia, a brand that forged forward in the owned content space ahead of the curve, is actually starting to invest more in paid media, as a way of amplifying its investment in own channels, said CMO Lisa Ronson.
The shift towards owned channels has serious implications for media owners who rely on advertising models, and Sharb Farjami, group director of sales at NewsCorp, said he believes publishers need to embrace that shift.
“Agencies aren’t just planners and buyers anymore and we [media owners] need to take a little bit of pride in understanding how that works.”
Brands need to take social influencers seriously, given that it’s how the next generation of audiences – who are shunning traditional, interruptive advertising – choose to engage with brands, said Bashful CEO Simon Bookallil.
Speaking on a panel which included BrandData CEO Georgie Summerhayes, Ministry of Talent director Roxy Jacenko and MaxMediaLab-Max Connectors senior talent manager Jill Birmingham, Bookallil added that it was not enough to simply sit in the influencer space. In a world where everyone’s a publisher, he said, “right brand, right platform and right celebrity” are critical traits for influencer marketing to work.
“It gives you an immediate audience Celebrity Networks and it allows you to steal some of [the influencer’s] magic,” he said.
“But to be authentic you need to have shared values, shared audience and shared outcomes. So I think finding the right platform, right brand and right celebrity is crucial for this to work.”
Jacenko, who also runs PR agency Sweaty Betty, said her talent agency, Ministry of Talent, represents about 30 different influencers and that its job as an agency is to ensure the talent and the brands match.
“It’s all well and good to say: ‘Well this person will do because they’ve got a million followers’ but if the million followers don’t actually live the lifestyle of the brand, there is no point.”
It’s not small fry, either. Summerhayes said the opportunity for brands who get it right is huge, adding that the top seven bloggers on BrandData have more followers than most magazines in Australia, and that combined they have a bigger audience than the highestselling magazine, newspaper and TV program in Australia.
While the opportunity is there, Jacenko said brands are still playing it safe. “People are engaging and using social influencers – but I don’t think they are taking huge risks just yet,” she said.
“People are safe, and rightly so, because it’s a new way of communicating. No one is going to throw huge budgets at it until they know that it’s working.”
New World Selling vs Old World Selling
Discussion spanned the futuristic to the themes and challenges agencies are facing now and in the near future.
CHE Proximity’s Chris Howatson’s keynote began with near-term changes he believes will shape the business. He named four key points for agencies to be mindful of: more detailed collection of data in which everything is tagged, increased data processing speeds, meaning that brands can anticipate consumer behaviour in real-time; what appears to be a single interface for the disribution of content; and, finally, the more widespread use of virtual reality so that brands can market via all five senses. “We’ll be able to smell, hear, taste, touch, see as if we’re there in the moment,” he said.
He said: “We used to create a brand feeling of broad persuasion [but] this will be the era in which we create utility for people.”
Howatson also pointed to more radical developments which are hinged on advances in neuroscience. He said that our increased understanding of how dopamine, serotonin and oxytocin regulate our responses to communication will mean that brands will be able to assess outcomes based on their customer’s genuine, physical experiences.
However, the panel quickly came back to the present day, with discussion of the introduction of premium programmatic platforms. APEX Advertising CEO Pippa Leary was adamant that, for some publishers, premium platforms are the only advisable way forward, saying: “If premium publishers are participating in open exchanges, they’re only going to see their inventory and yields go one way because their premium inventory is being mixed in with this huge longtail of amateur inventory.”
Bohemia managing partner Brett Dawson concurred. “We will buy premium content that converts for our customer. That’s what clients want. They will pay on an outcome model. We won’t transact on a CPM, but a cost per outcome,” he revealed.
ARN national sales director Matt Granger explained how he sees his company as not only a creator of premium content, but also as a media agency on account of its capability to provide so many similar services. “We have the resources to do it, we’re an agency in our own right,” he said.
"Screen time is what we should be talking about. Screen time is absolutely exploding, and there’s huge opportunity around this massive explosion in screen time." Clive Dickens, Seven West Media.
"We’re being taken to a place where the CPM is no longer part of the conversation. Because it won’t be about a basic buying metric which is one-dimensional, always the lowest common denominator ... the CPM will die." Peter Wiltshire, Nine Entertainment Co.
“At the US upfronts CBS and many of those companies came out and delivered a great line which is basically ‘we can deliver big audiences fast, but also right now we can be small’. We can be small and targeted and I think that’s the opportunity in TV.” Mark Frain, MCN.
“The inertia we’re seeing from the domestic players is down to the fact that there’s no other media that is as effective at filling the top of the funnel for consideration as television in terms of audio visual messaging.” Peter Horgan, OMD.
“Are agencies technology advertising solutions providers or ‘independent’ advisors to their clients on how to invest in media? I find that a very big issue for clients and agencies to solve through. When they are mixed in one shop you are always counting your fingers every time after a meeting.” Ed Smith, Foxtel.
“All the optimisation in the world might lead people to the river, but it won’t make them drink.” Virginia Hyland, HM Communication Group.
The Tech FastFronts
"There is a huge amount of data. In fact Adroll actually crunches 30 times more data than the NY stock exchange on a daily basis, which is massive." Denise Wyer, Strategic Accounts for Southeast Asia.
“The traditional campaign is created three to six months before it begins, and that’s nowhere near quick enough in a world where people are engaging in real time.” Ian Laurie, Head of Social.
“I see a lot of brands still stuck in the old school thinking around content marketing, which is: ‘We’ll create content and people will click.’ It’s not that simple.” Ayal Steiner, General Manager.
"We know that consumers love video, we know that publishers and broadcasters are loving video as they can make money out of it, but moreover we know that the marketer loves video. They have forever – they have for ages. For those of you who think the TV networks have their heads in the sand, you need to do a bit more homework. This is a really innovative market and the reality is that all of these things [all formats] will be available on a platform – like TubeMogul – very soon." Sam Smith, MD (Australia & NZ).
"It takes us to a position where we can uniquely take this idea of making brands click-able: from packaging, to point of sale to everything in the above and below media mix." Steve Sos, VP Asia Pacific.
- This article first appeared in the May 29, 2015 edition of AdNews.
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