Direct sales data boon for print; warning issued for agencies

By Arvind Hickman and Sarah Homewood | 16 May 2016

The inclusion of newspapers' direct sales bookings into Standard Media Index (SMI) data provides a more holistic picture and should improve the perception of print advertising, but it's also a warning for agencies, according to experts.

This week, SMI struck a 'world first' deal with newspaper industry body, NewsMediaWorks (previously The Newspaper Works), to launch the News Media Index which allows SMI direct access to publishers' direct sales data.

Adding direct ad sales to agency bookings data more accurately reflects the dollars that newspapers get, adding more than a billion dollars to previous annual estimates putting print at $1.9 billion in 2015.

It also softens the scale of decline that has been reported at length and NewsMediaWorks chairman and News Corp boss Michael Miller admitted that it should have done it sooner.

Newspapers have a higher proportion of direct sales than other channels with some experts putting it at around 30% of all direct ad sales, whereas it sits at around 9% of total adspend by SMI's agency bookings.

The new metric places the annual decline of print ad revenue at -10.7% in 2015, whereas it was -16.4% when just agency bookings are considered.

Agencies claim it's of limited use without comparable data in radio, TV and other channels, but PwC executive director, Megan Brownlow, suggests agencies should take heed.

“When you drill into the numbers, what's fascinating is it shows agencies are responsible for less than half of the [newpaper] buy. That tells you a couple of things,” she explained.

“First, media that has fallen out of favour with buyers have made smart strategic moves to beef up their direct sales capabilities. It's also something of a watch-out for agencies – in the rush to programmatic and digital, by eschewing channels that advertisers still like using, you might be doing yourself out of some business.”

Maxus chief executive, Mark McCraith, said it is partly a reflection of small businesses that don't use buying agencies and are “often more in tune with the results they are getting out of print”.

Omnicom chief executive, Leigh Terry, said the new metric provides greater fairness and “financial attractiveness of publisher assets”, but it wouldn't be the most important consideration when deciding where clients should spend their ad dollar.

“Function or fashion aside, effective reach and, more importantly, effective client results, remain our focus as they have always done,” he said.

It's a point that Carat chief investment officer, Ashley Earnshaw, also highlights.

“This wouldn’t impact our investment into newspapers – we filter out the hype in market and focus on audiences and business value for out clients across their assets, which includes consumption, engagement and ROI,” he said.

Earnshaw said that for the new metric to be truly valuable other channels including radio and TV need to follow suit.

“If everyone went this way then at least it would give it a bit of standardisation,” he added. “For agencies it's interesting to understand what is going on for newspapers, but the data is not as compelling if you can't make a point of comparison across the market.”

Match Media head of investment, Daniel Cutrone, agreed that the entire media industry needs to come on board for the data to add real value to client conversations.

Although Commercial Radio Australia provides direct sales data to Deloitte, which releases monthly ad spend data, and KPMG provides halfyearly reports for FreeTV, a consistent approach across all channels is sorely lacking.

So while the News Media Index is “a good headline for print”, as Earnshaw put it, its value to media planners will be limited until other channels follow suit.

Behind the news

This move by the major publishers and its industry body to allow SMI to incorporate direct sales data has been a long time coming.

For years, the major publishers have been trumpeting how many deals are done direct but with no evidence to present to market. While many media observers in the know have acknowledged this to AdNews, forming the News Media Index provides the market with a more transparent picture of exactly what that direct number looks like, dramatically shifting the dial for print and its perceived value to advertisers.

While agencies might be dialling back print spend – it’s a little less bleak for advertisers that deal directly with newspapers. This could also mark a greater play by SMI to get other industry bodies involved. Media buyers note comparable data across all channels will help this new metric gain traction.

The real questions then are will the other players get on board and are we set to experience numbers fatigue?

SMI is reported monthly. NMI will be reported quarterly. Radio and TV figures have different reporting structures again. So, it will likely be sometime before the industry has one set of numbers they can rely on that come from the same source at the same time.

However, that does not detract from this being a positive move for print. By letting in a third party in, it dispels any notion publishers are talking themselves up without scrutiny. Only time will tell if the other traditional players are interested in the same benefits.

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