Archive for February, 2008
February 28, 2008
The Index showed some sign of life this week with a 0.79% rise in value, though the performance of individual stocks varied wildly - from Seven’s (SEV) 6.58% drop in price to $11.65 to Village Roadshow’s (VRL) spectacular 14.58% rise to $2.75.
Other movers and shakers include Macquarie Media (MMG) up 5.04%, Crown Casino (CWN) up 6.28% and Wotif (WTF) up 6.44%. Stocks on downside include the two media partners, Fairfax (FXJ) and Austereo (AEO) down 3.42% and 5.42% respectively.
REA’s strong earnings report to the market during the week flicked the switch on negative sentiment around the stock, pushing the price up 3.17% to $5.54, reversing a nine week downward trend.
February 26, 2008
Wanted: someone to market dross using the latest online techniques. Should not be squeamish about compromising news standards to fatten the advertising margins. Experience in using editorial resources to pitch for advertising accounts an advantage.
This media dystopia is breathtakingly realised by David Higgins in an excellent contribution to the debate about the future of news gathering and reporting in a digitally fixated world. The article, ‘Scooped by the net’ is published in the February/March 2008 edition of The Walkley Magazine.
The article is one of the most unapologetic of its type, arguing in a very clinical manner, that online news services, and specifically journalists, need to get smarter about the ‘design’ and marketing of copy. Higgins’ premise is that the fragmentation of news services, with blogs and the like, as well as resurgent services like BigPond, are stripping audiences from incumbents like News and Fairfax.
The corrollary of this summation is that the news agenda is increasingly set by search specialists like Google (and its AdSense platform), even when the author freely admits that the incumbents are still the beneficiaries of “great journalism”. However, it seems great journalism is not enough to to keep the incumbents afloat over the longer term. Instead, a dose of sales and search savvy (SSS) is required to ensure a competitive advantage.
Reading the article twice to be absolutely sure of what was actually being advocated, the proposed solution includes proliferating the use of search engine optimisation (SEO), contextual ads and turbo-boosting the relevancy of general online advertising through behavioural targeting analytics. The latter requiring more of an emphasis on reader registration to ensure validated personal details become the primary queues for targeted advertising.
The revolution doesn’t end there. Online news services must develop “new sections…to accommodate advertisers”, while eyeball minutes - that often misinterpreted audience metric - must be inflated using a maze of widgets, trinkets and a host of sensory paraphernalia.
Yes, this all requires news gatherers to be multi-skilled, as well as gain an appetite for stress spread across a 12-hour day, but hey, if you can’t stand the heat, “get a new career.”
The argument for smarter marketing techniques shouldn’t be an argument. It should be a given. SEO is now a hygiene factor for best-practice content production, while the value behavioural targeting (BT) is able to unleash in an advertising context, will, at a minimum, triple the return on its investment. These developments are extraordinarily important in a modern news gathering operation, and their advocation by someone from the editorial side of the ledger is inspiring.
Yet an argument which assumes the cup runeth over with “great journalism” and lays the blame on inadequate marketing techniques for failing to reach the Corey Delaney’s of this world, and the subsequent fragmentation of online news audiences, is a fairly self-serving and falls well short of the mark in terms of explaining current inadequacies.
For example, Margaret Simons in her recent book, The Content Makers, makes the charge that Australia is stunningly underreported for a $1.1 trillion dollar ‘business’ and community. In this context, is it more plausible to assume that the fragmentation of the online news market isn’t necessarily the result of a poor listing on a Google results page but because the product itself is becoming increasingly inadequate in terms of orginality, scope of coverage and insight?
In short, it isn’t Corey who is abandoning, suppplementing or shortening their association with the incumbents, but professionals, technocrats and other IP-rich personnel who are simply dissatisfied with the sameness of news lists, and how competing mastheads run similar editorial lines to optimise their Google commissions.
Consider the following concept which illustrates the increasing gap between the direction and resources of existing news gathering. The two terms used here are the Journalism Info/Utility Index (JII) and the Available Data Index (ADI). In short, with the measurement, collection and digitisation of information growing in lock-step with computing power and device innovation, are the capabilities and skills of our news gathering ‘facilities’ keeping pace?
Even accepting that this hypothesis is only half true, there is still some semblance of a disconnect between what is being delivered in a news sense and the volume of data being produced on a daily basis. Ergo, in steps the specialists, the analysts and citizen journalists to fill the gap.
Online publishers of all persuasions need to understand that the returns from their online marketing (ROMI), no matter how sophisticated in scope (e.g. SEM), will continue to decline so long as:
a) all publishers play the Google game and base their editorial policy on the same search data;
b) become too aggressive/manic in replicating Facebook’s widget and API potpourri in the vein hope of propping up session times;
c) compromise editorial quality (including journalistic codes) for the sake of optimising advertising revenues through paid links and advertorials.
On the last point, the danger of short-term gain at the expense of brand integrity over the longer term are obvious. Hence, the suspicion that comments such as these are calculated on the basis that all publishers will adhere to similar practices, leaving no-one at a competitive disadvantage. A key question here is how do the offline mastheads view this type of risk taking?
A concrete consequence? Consider the upcoming pitch for Emirates’ $150m media account. Why wouldn’t a publisher tag -team with a short-listed agency to strengthen the bid by offering online editorial resources to improve the media strategy’s cost-per-click (CPC) or cost-per-acquisition (CPA) results?
Realistically, the ADI-JII gap will never close, ensuring the ongoing proliferation of online news sources, which over time will only build up their own credibility and editorial quality to the benefit of their own Google rank.
The slippery slope for incumbent news groups is to compromise on editorial quality and play by similar marketing rules by hedging the low-to-medium growth in general online advertising with a paramount search (AdSense) advertising strategy. This road inevitably leads to the commoditisation of news where the returns are negliable compared to value associated with a strategy that perceptively minimises the ADI-JII gap. If that means growing at a lower rate than the market then so-be-it.
February 24, 2008
While a majority of online users have contributed to a blog or forum (56%) in the past six months, that average hides a much higher engagement amongst the 18 to 24 age group, with up to 66% having contributed to a blog or forum in that period. From the perspective of recency, 34% of this same age group contributed in the last week, compared to an average of 17%.
In terms of downloading a podcast or vodcast, the tables are turned, with a majority (53%) not having downloaded said files in last six months. Of those who have, only 8.3% downloaded a podcast or vodcast in the last week, and 28.4% infrequently. Interestingly, the age group with the highest activity rate in terms of downloads is the 45 to 54 age group, with almost 52% having done so, followed closely by the 18 to 2 age group with a 51% participation rate.
If judged in terms of our more reguler, or systematic, media habits, like reading the morning headlines or buying our weekly gossip magazine, the regulatory of our engagement via blogs, forums or downloads, remains immature at best. Just 17.5% contribute to a blog or forum once a week, and only 8% will download a podcast or vodcast at least once a week - hardly the figures of an engaged market.
Of those who do engage, the distribution across varying genres and content groups (see above graph), indicates an interesting spread from “general news”, where there is an almost equal marketshare between blog and podcast participation, through to “entertainment and celebrity news”, where podcasts/vodcasts are vastly preferred to blogs and forums. In almost a complete reversal of this split in audience preferences, the “opinion/commentary” category is dominated by the use of blogs and forums.
This is not to say that these audience preferences are fixed. In most cases, the option to engage is usually only via a blog or forum, with little or no downloadable content available. Nevertheless, as frequency of audience engagement improves, it would pay for publishers to consider what is the preferred method of engagement for their audience(s), and the frequency most useful to that audience. There is simply no point publishing a podcast once a day if your audience is unable or unwilling to keep up with such an inundation of content. Likewise, a moderated forum might need to ramp up its broadcast schedule to daily alerts or topics if the audience is willing and capable of engaging at such a rate.
Understanding and measuring the ‘dynamism’ of your audience’s engagement will have an impact on service levels and production standards.
February 23, 2008
After two weeks of subdued activity, the VM rallied - downwards - shedding more than 3 percent in the last week alone, to 864.22. We’re now back on-trend, which was set in the first four weeks of the index. Sharp drops by the likes of APN (-6.4%) to $4.82 - the lowest price since the index began - is indicative of last week’s overall performance.
In fact, of the 20 stocks covered by this index, a majority (12) of these stocks reached a low point in the last week. The Photon Group (PGA) dropped more than 13%, while Village Roadshow (VRL) and Wotif (WTF) fell 9.43% and 6.48% respectively.
Even Fairfax Media (FXJ), fresh from reporting strong revenue gains from a now completed merger with Rural Press, and a decent contribution from Fairfax Digital, failed to attract much support, slipping 1.45%. The two stocks to shake off all pessimism were Seek (SEK) and Seven (SEV) - up 3.75% and 5.23% respectively. Seek is riding on forecasts of continued growth in employment advertising, combined with an increasing market share - at the expense of the major newspaper publishers.
With expectations that there will be a slowdown in advertising spend for calendar 2008, the only real defence against negative market sentiment towards media stocks is to ensure the enterprise’s market position is a clear number one. Both Seek and Seven share that advantage.
February 21, 2008
The acronym MIA is best known for its reference to people ‘missing in action’. In this context, MIA refers to the Measurement of Interactive Audiences, which is a rather non-descript term for a major international initiative, headed by the Europeans, to bring some consistency in online audience measurement, especially in reference to cross-border deals - few and far between in the Australian context.
It seems that from the noises emanating from the international conference on Online Media Measurement (I-Com), the intention is to ensure the issue of online audience measurement no longer remains missing in the trench warfare of digital media.
The MIA project is “supported” by IAB Australia, but the MIA think tank is overwhelmingly dominated by the Europeans, with one US IAB representative. The key message from the MIA group is that multiple measurement standards exist across many markets, what’s needed isn’t necessarily a common metric, but ways of ‘translating’ one metric to another, a sort of Worldwide Audience Currency System (WACS). Their priority seems to be helping planners design and execute campaigns across borders - a very Euro-centric issue.
While the momentum builds 12,000km away for some level of standardisation, the Australian market, with its unique blend of user-centric, site-centric and hybrid measurement platforms is further complicated by a solid block of publishers sitting on the IAB board, counterbalanced by a coterie of very powerful classified players, predominantly based in Melbourne.
This Melbourne-club is super-competitive and dominates their particular verticals, be it employment, real estate or automotive. In most cases, the incumbents don’t even come close in terms of market share, which suggests a highly equitable power-play between the two groups on the matter of common audience measurement standards and what exactly should be taken into account - page impressions, time online (eyeball minutes), engagement, uniques or simply a market share percentage?
That’s why, with so many powerful vested interests dominating the Australian online advertising market (general, classifieds, S&D), all parties, particularly the IAB, should pay very close attention to the MIA project between now and when it releases its report at the Interact Conference in Berlin on 2nd June.
February 17, 2008
In the context of media and digital communications, growth by acquisition has become the necessary short-cut to maintaining/growing market share and diversifying revenue streams. Innovation, particularly with regards to technology, is at unprecendented levels and matched only by the rate of diffusion into consumer markets.
Enterprises have no chance to set the agenda in these product and sales cycles unless supported by a substantial R&D function, like Apple, Nokia, Microsoft and Google. Everyone else is either a habitual acquisitor or a holder of a business plan with the phrase “trade sale” underlined three times.
In the US, for the 12 months up to December 2007, M&A activity in the media and information industries totalled more than US$110b - up 32% on 2006. A total of 838 transactions occured, ranging from News Corp’s protracted purchase of Dow Jones (US$5b+) through to Discovery Communication’s takeover of HowStuffWorks for US$250m.
By category, US$31b+ alone was spent on the acquisition of marketing and interactive services, very much reflecting the pattern in the Australian marketplace (consider Photon, Bluefreeway and Hyro), with the exception of some high-end media deals such as Fairfax Media-Rural Press and the News Ltd-Federal Publishing.
However, the real M&A fireworks belong to the ‘Database Information Services’ category, which saw total deals in 2007 reach US$21b - up from US$1.8b in 2006. Interestingly, the average value of those deals in 2007 was US$780m, signficantly up from the 2006 average of US$46m.
Likewise, the deal value in the consumer magazine sector rose almost 300% - from US$1.8b to US$6.9b+ - on the back of 54 seperate deals.
In short, 2007 witnessed some remarkable growth in M&A activity, but it wasn’t arbitrary. Those categories which experienced sizeable jumps in activity have a number of factors in common, including the need to consolidate very fragmented markets, particularly with regards to intermediaries, like agencies and digital marketing specialists.
Secondly, the preference for data services and media attracting very specific, niche markets indicates a growing realisation that data, market segmentation/targeting and audience engagement models are increasingly setting the strategic agenda for the advertising and marketing industry.
February 17, 2008
News Limited’s Newsspace.com.au is a nice mapping exercise for the media conglomerate’s brands. Covering all media in the News Limited stable, the site aggregates most of the details required of media planners and buyers.
This, however, is simply a Beta version of the group’s preferred cross-media selling model. The alternative (and long overdue) option is the ability to build a campaign’s reach across all brands (online and offline) using a centralised, or consistent, audience measurement system. This includes standardising audience segments cross viewers, readers and browsers, such as News’ preferred audience mapping system, MOSAIC.
The ‘utopian’ view empowers the media planner and buyer to nominate a constituency, say, “fashionably wired” (6% of Australian households), or “domestic appliance” (22% of Australian households), and run that query against every News brand available, offline and online, domestic and international (particularly online media). The key for News (and other publishers) is to establish these standard profiles across online mastheads, which to date has been extremely limited in scope.
A reach and frequency tool of this capability, though limited to one media conglomerate and its JVs, provides significant efficiencies in buying and planning time as well as the minimisation of audience duplication beyond a certain frequency range. Equally important, Newsspace puts the editors and journalists out in front - unironed shirts, crooked ties and all. Maybe Newsspace should take the concept further and document the newsroom and all its deadline-pressure antics. Now that would be a powerful sales tool.
February 14, 2008
If the Australian IAB were a stock on the ASX, and its fortunes rested on the performance of online advertising market, then the latest quarterly report into online advertising expenditure would have caused a major sell-off, with warnings of further downgrades.
The December quarter’s online advertising expenditure report put out by PricewaterhouseCoopers (PwC) and the IAB estimates total online expenditure for the 12 months to Dec 07 rose 34%, compared with 61% and 60% for the two previous years respectively.
Broken down by classification, general advertising rose 17.7% (56% in 05/06), classifieds by 19.3% (45% in 05/06) and search & directories (S&D) by 55.95% (81% in 05/06).
From a market share perspective, general online advertising now represents 27% of the total. Likewise, classifieds sit on a market share of 27%, with S&D the only classification to improve its standing, rising from a 40% share to 46%.
In aggregate, the online advertising market has a value of A$1.346b (06/07), compared with 05/06’s figure of just over A$1b.
The protestations which have accompanied the report’s release follow the line that the slowdown in growth is due to a “maturing” of the industry. In fact, this nascent industry has no-where near reached its potential in terms of share in adspend. Instead what is impacting these growth figures, particularly for general advertising, is rather more complex.
From a methodologcal point-of-view, the PWC-IAB report captures data from at least 1,000 websites - but not all. The contention is that online general advertising, in real terms, has not declined in the previous 12-months. Instead the dollar value of general advertising may have risen (even to the point that its share of total spend is steady or rising?) yet we are ignorant of this fact because a higher proportion of general advertising is now spread across the long-tail of niche and super-niche sites. This argument holds validity in an environment where ‘audience engagement’, rather than audience size, is gaining the ascendency.
The alternative argument is that general advertising has indeed shifted down a gear, with S&D siphoning off discretionary dollars because of the perenial issues of audience measurement standards, and relatively poor methodologies which underpin audience counting in a general advertising environment. And what of the ‘great white hope’ of true behavioural targeting? Why in 2008 should I be exposed to a banner promoting the 2DayFM program, Kyle and Jackie O when I’m trying to read a story about Hezbollah threating Israel with war? I’m not the optimal demographic for this campaign, and my click-stream certainly doesn’t suggest an inkling for light entertainment. Even the comments I post on the same website fail to sustain a case for serving up the breakfast duo.
In short, online businesses which depend on general advertising have significant structural issues to address - both in terms of content, and their remits around product development, the standardisation and quality of audience measurement, as well as real-time audience profiling and segmentation. Multi-million dollar ad accounts are increasingly gravitating towards those entities which make the case using robust audience metrics and analytics. This is where the gap needs to close, and fast.
The current measurement regime in Australia provides neither standardisation or integrity for agencies, advertisers or publishers. As part of a 2008 roadmap, this is the industry’s number one priority.
February 14, 2008
In its 6th week, the VM Index slipped again, this time by just under one percent. An anemic result, which was only made marginally interesting by some individual stock movements. Prime (PRT) was up five percent, while TEN and the Macquarie Media group (MMG) were both up 2.35% and 2.37% respectively.
Stocks which performed like a dead weight on the rest of the index included realestate.com.au (REA) down 4.52%, Mitchell Communications (MCU) down 4.86% and News (NWS) down almost three percent. In a market where the money deserted the banks, not much was actually redirected to the media sector.
February 13, 2008
Making up for arguably an ambivalent consumer attitude towards mobile Internet browsing, several industry players are taking some extraordinary game-changing moves to shake the telcos from their bloody-mindedness (and self-delusion) that they are, and will remain, the gatekeepers of the mobile Internet.
Google’s Android OS blasted onto the scene in early November 2007. What’s more, the Android announcement included the establishment of the Open Handset Alliance – a federation of some heavy hitters in the handset, software, hardware and telco industries.
Then another bombshell. Nokia announces at the Mobile World Conference the formation of the Nokia Media Network (NMN). Already the network will manage the mobile real estate of brands like AccuWeather, Discovery, Reuters, Sprint, and of course, Nokia’s own M-sites.
Two sweeping changes to the mobile space, both with the intention to consolidate a fragmented service-provider environment, where a lack of compatibility is doing little to encourage value creation in terms of content development, applications and media buying.
In less than a month, the international mobile industry now has a handset manufacturer playing the role of media and marketing broker for the mobile space, while a search specialist sets the agenda in terms of an open-source operating environment for mobile devices, then stumps up US$10m as a cash incentive for would-be application developers.
At a local level, Vodafone Australia takes the uncommon step for a telco of educating agencies and advertisers about the mobile Internet, specifically on how to incorporate mobile into a marketing plan and media schedule using Vodafone’s Mobile Advertising Portfolio.
Some great collateral has been circulated, clearly detailing key points around CPM rates, response rates, top-line demographic data, dimensions, how to buy and inventories. This is a tremendously beneficial step in the simplication of mobile Internet as an advertising platform.
However, there is one interesting “pre-requisite” for businesses deciding to build their own campaign microsite, rather than outsourcing it to Vodafone. That is, all external links must be removed and “no attempt to obtain the consumer’s mobile number can be made.” The point is there remain limits to a carrier’s ‘openness’, even while new market entrants emerge and traditional players change their spots.
This is an extremely dangerous period for any proprietory supplier or network in the mobile space. Telcos can view these developments positively, realising the enormous upside for their data revenues, or they can fight tooth-and-nail to maintain some semblance of a walled garden. The proliferation of virtual mobile networks is an added complication, suggesting an almost certain content war between operators to build and retain their on-deck audiences.
