‘Advertisers starting to rebalance budgets towards brand building’ – Nine’s CEO

Arvind Hickman
By Arvind Hickman | 23 February 2018
Nine CEO Hugh Marks.

Nine boss Hugh Marks believes advertisers are starting to rebalance media budgets towards brand building and television as the network reports one of its strongest half yearly results in years.

In the back half of 2017, Nine grew group revenue by 9%, including strong 10% growth of its television business in a metro TV advertising market that grew only 1.4%.

Although much of Nine’s success is down to a strong content slate that delivered strong ratings success against rival network shows, Marks believes the TV sector is starting to shine after several years of decline.

“I have a lot of meetings with advertisers and agencies and there is a feeling and understanding that television works,” Marks tells AdNews. “There’s also a recognition that we need to move back to building and growing brands and that’s where television is at its best.

“It’s not to say that digital doesn’t have a role in campaigns because clearly it does, but it’s just a little bit of rebalancing back to brand advertising and brand recognition and television’s pre-eminent role.

“As long as we can keep producing great content that keeps people in the platform then free to air television has the potential to continue to grow.” 

Nine’s strategy bearing fruit

Marks says that Nine’s results benefitted from a “double pick up" of not having to compete with Seven’s coverage of the Rio Olympics and a stronger performance across its content slate from the get go.

He expects Nine’s performance in the current half year (H2 FY18) will be slightly held back by Seven’s coverage of the Winter Olympics and Commonwealth Games.

What will please Nine’s top brass most is that there has been consistent growth across its four pillars of the business – TV, digital publishing, 9Now and Stan. It’s a sign that Nine’s strategy to build a “TV business for the future” is bearing fruit.

“In the past 18 months we have been positioning our business for the future and we are seeing that play out with real numbers,” he adds. 

Brands lapping up integrations

TV’s growth of 10% included a 7% YoY increase in advertising revenue to $531 million as well as FTA revenue share lift of five percentage points.

Premium ad revenue, which includes sponsorships and integrations, had strong growth of 32% and now accounts for one in every six dollars spent on TV advertising.

In an ad market that has only had marginal growth after years of decline, this is a particularly impressive result and underlines the value advertisers place in being aligned with premium sports and entertainment content.

AdNews asked Marks whether such growth was sustainable and whether there would come a point when sponsorship clutter became an issue.

“I don’t think clutter is an issue and there’s still many more opportunities around our shows,” he says.

“As a network we are getting better at working out what those opportunities are and how we can integrate them. It’s another area where we are bringing the market with us and we’re investing sales resource in.

“When I talk to clients it’s the area where we are really delivering massive results and I think there is still growth to come in recognition of the impact of that kind of advertising.”

9Now grows share

Nine’s broadcast video on demand (BVOD) platform 9Now has grown its audience to five million registered users and lifted revenue by 86% to $18.2 million in H1 FY18.

9Now now contributes 22% of digital revenue, a sizeable increase from 12.5% in the H1 FY17.

“Markets just take time to respond. When you’ve got 100% growth of audience on a platform it’s hard to get 100% revenue growth at the same time, it just takes a while for that to come around,” Marks explains.

“It’s certainly a good platform for someone to advertise on and our platform and user experience is getting better but the audience growth is still way ahead of where the market is moving in terms of advertising so there’s still further growth in that platform.”

In Nine’s investor presentation, the network flagged partnerships with YouTube and Facebook as potential future sources of revenue.

Marks tells AdNews it’s “early days” in Nine’s plans to monetise content on Facebook and YouTube.

“This is more about the potential of the future than the current,” he says. “It’s another area for us to look at and say ‘are those platforms competitive to our platform or are they legitimately incremental viewership.

“If it’s legitimately incremental viewership and we can grow that in conjunction with those platforms then it’s another way for us to build advertising opportunities around our content. The job is probably only 5% done in this case, it’s a 95% to come in future years.”

Stan, which Nine jointly owns with Fairfax Media, grew its revenue by 83% and its subscriber base to circa 930,000 active subscribers.

The SVOD is approaching a break even point and continues to make significant gains despite the arrival of Amazon Prime Video.

It’s another example of how Nine has well and truly shifted from being a TV business to a multimedia business with growing assets in the massive digital video space.

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