BOTW: The whole ‘television is dead’ thing; The power shifts at Nine
Welcome to Best of the Week, mostly written on Friday afternoon and Saturday morning gazing down Broadway from the Mercure.
Today: Some home truths about television and the ascension of Matt Stanton at Nine.
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Television’s audience decline goes main stage
Tim Burrowes writes:
It was a week of earwigging.
At breakfast in a coffee shop near Central on Tuesday morning, the owner and one of his regulars were talking about the Matildas. Here was evidence that Australia was indeed enjoying that shared cultural moment we’ve been hoping for.
The night before, the Matildas had seen off Canada, taking us into the group stages.
The conversation though was wider. It was “disgusting” how little of the tournament outside the Matildas games were on free to air television, complained one of them. Who could afford to pay for Optus? Bloody Channel Seven, only interested in the Australian games.
There was, unsurprisingly no understanding in that coffee counter conversation how the anti-siphoning laws work. The Women’s World Cup isn’t on the list of protected events. Optus could have kept the lot if it had wanted, including putting the Matildas behind the paywall. Licensing key games back to free to air was smart politics, and has also turned out to be a bargain for Seven which now looks smart for grabbing ratings-friendly rights it didn’t particularly believe in before the tournament
Later that morning, in the ticket queue for Advertising Week at Luna Park, I indulged in more earwigging. If comedian Nick White’s “that” co-worker character has a female twin, she was standing next to me. And she works in marketing.
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The vocal fry. The passive aggressive statements. The rising intonation at the end of each sentence.
Imagine female Nick White saying it: “Mo-ving for-wards, I’m going to need proper line of sight? Yeah?
“The agency keeps fucking around on the timeline, but you need to stay on top of that? Yeah?”
It was a relief to get inside.
With a preponderance of media trained local executives from the tech platforms, there wasn’t always much in the way of real talk from the stage. After all, a foolish way to reduce your career prospects is to say something noteworthy enough that your bosses might read about it in the US.
One exception came in a panel featuring media agency bosses who talk a little more plainly than their platform counterparts.
A couple of moments stood out as, until now, universally unacknowledged home truths.
The first came from Mark Coad, CEO of IPG Mediabrands Australia, parent company of agencies including UM and Initiative. Coad is as well connected as anyone in the industry to understand the pressures faced by local managements across the board. Not only is he a boss, but he talks to his peers and trading partners about the pressures they’re facing.
Coad raised a hangover from the talent wars that kicked off before Covid and got worse during the pandemic. That shortage of people meant that every organisation carried a high level of vacancies. This time last year, the talk was that there was the equivalent of an entire holdco worth of vacancies across the groups. The market has since caught up, and is indeed starting to go the other way.
That talent shortage may have put the remaining workers under huge pressure, but it also saved on salaries which dropped to the bottom line. Those margins became addictive for upper management, who now demand them as a permanent new normal. Saying that it was an issue facing media agencies, clients and media owners alike, Coad explained:
“The biggest issue out there at the moment seems to be the delta between the expectations of our stakeholders and what we’re really capable of delivering at this point in time.”
The “we” Coad was referring to, was, let’s assume, the industry as a whole rather than specifically his own bosses and stakeholders at IPG.
“It’s universal. I don’t know how we punch through that. It’s almost like our stakeholders are drunk on the margins and the revenue we were able to drive when we weren’t able to spend enough money on staff moving around. It’s the same everywhere I go. The big challenge is how do we manage out stakeholders to build businesses that are more sustainable in the longer term?”
Short terms versus long term. It’s the frustration for any boss working for a stock market listed business. Wanting to build happy, productive teams for long term growth, versus the board wanting record profits every single quarter.
Later in the same session, more of that real talk came from Aimee Buchanan, boss of WPP’s Group M.
Considering the imminent demise of broadcast television has been awaited for the last 20 years, it’s odd how little we’ve been talking about it now that the moment has finally arrived.
Depending who you talk to, television is delivering audiences 20% smaller than a year or two ago. That means that any advertiser or agency which sticks with their existing media mix is immediately going to face a 20% audience shortfall.
The first time the penny really dropped for me on just how challenging things have become for the television sector (and how swiftly the moment finally came) was at our HumAIn conference last month. During our panel on media mix modelling, Mutinex boss Henry Innis referred to the collapse in TV audiences so matter-of-factly, I felt like I’d missed a memo.
Buchanan was similarly matter-of-fact. “There’s an interesting dynamic. The landscape is at a tipping point from a channel point of view. One of the questions we’re getting asked a lot is, what should our channel mix be? Where are we at for television versus video? We’re spending a lot of time dissecting that and understanding, what is the right mix? We’ve never been in a moment of more fragmentation and more disruption, and all the traditional stuff that we’ve known and done, and worked, is not going to work. If you look back a year, we’ve seen TV audiences decline 20%. The world has shifted. We’re having to think about that quite differently.”
Let’s be clear, those comments are a (politely phrased) bombshell. Buchanan controls a couple of billion dollars of advertising spend. The media companies she is talking about are among WPP’s longest established business partners.
The broadcast TV market is in terrible trouble. The moment was delayed by Covid forcing everybody back in front of their TV sets, but now it’s finally here.
Despite those two decades’ notice, it sneaked up on us.
This week Standard Media Index, which measures the activity of all the major agency players, released new data on ad spend not only for June, but also a wrap up of the last financial year.
Across the whole year, TV was down 10.3%, In June alone it fell 11.9% compared to a year before.
Even allowing for a 12.5% growth in advertising in digital TV formats, which started from a much lower base, the overall video sector was down by 9.9% for the year. That’s unprecedented at any point in the history of television, including Covid.
That puts television alongside the disappearing format of printed newspapers, which were down by 17.1% for the year.
Not theatTV is the only medium that’s in tough times.
There was more real talk over on LinkedIn. Which is something you don’t get very often.
Chris Walton, boss of independent media agency Nunn Media, wrote about the SMI numbers and pointed out that the trouble goes beyond television, and that the second half of the financial year was far worse than the first.
That was backed by SMI’s own data. From July to December, the market rose by $156.7m (or 3.4%). Then from January to June it fell by $174m (4%). And it’s still falling.
Like many of those changes, those in the heart of it struggle to publicly admit it.
At different points in the conversation, both of them turned unprompted to the subject to ratings. It felt like it was a subject very much on their mind.
Hopkins told listeners: “If I touch on breaking myths, the whole ‘television is dead’ thing is super interesting. Channel 7 reaches 17 million Australians every single month, YouTube reaches 17 million every single month, so I’m pretty proud we’re in that company. The engagement levels we get? Unbelievable.
“There’s this view we’ve been killed by the streaming partners… We’re in company with a whole lot of great media partners but we’re not dead, we’re punching above our weight.”
Similarly, interviewer Paul McIntyre didn’t raise the subject of an audience problem before Burnette brought it up too: “We don’t have an audience problem, we have a perception problem.”
I suspect that feeling the need to volunteer that your medium is not in trouble and that you don’t have an audience problem may turn out to be an indication that your medium is in trouble and that you have an audience problem
The interview made me think of the now defunct industry body Newspaper Works, which spent years whistling past the graveyard.
Newspaper Works wasted to much energy denying that newspapers were in trouble, it failed to tell the story of their reinvention as subscription-led digital businesses.
Six years ago, with Think TV on the drawing board came along, I warned against television making the same mistake.
Until recently, Think TV, helmed by Kim Portrate, has done a good job at championing the continuing strengths of the medium. But back in June Foxtel pulled out and her members – Seven West Media, Nine and Ten’s owner Paramount cut the budget and half the staff of parent body the Premium Content Alliance were made redundant.
The understanding was that the three TV players would each make more noise about the medium themselves.
There are more lessons to be learned from Newspaper Works. While the publishers genuinely reinvented themselves as subscription-led businesses, that was a story not properly told at the time.
The same is going on in television now. Ad-funded streaming is a huge new battleground, not just with the so called lean-forward of BVOD (broadcast video on demand) but also with the emerging FAST (free ad-supported television) lean-back channels.
The most significant move in the market to date comes at the end of this month when Paramount finally launches Pluto TV.
I’m going to make a risky prediction, by the way: If it gets the rollout of Pluto TV right, Paramount will move up from third place commercial TV player.
That does come with a big caveat though. As Dan Barrett pointed out in Always Be Watching this week, the secret sauce of FAST channels is the lean-back nature. However, If there’s too much friction involved in getting to Pluto TV within the Tenplay app, where it will live locally, the addictive nature of Pluto TV (once you land on it, it’s just… on) will not be as compelling.
FAST and BVOD are the lowest hanging fruits for Nine and Seven too. The battleground to be the country’s leading premium ad-supported video service is wide open. That’s the positive conversation worth having, unlike the one where you need to tell everyone you’re not dead.
Matt Stanton, Nine’s next CEO?
The occupancy of the second rung of the ladder at Nine shifted this week.
Matt Stanton, who joined the company just under a year ago as chief strategy officer, will now add chief financial officer to his responsibilities, with the almost immediate exit of CFO Maria Phillips after an unusually short three years.
Stanton now looks the most likely successor to boss Mike Sneesby who’s been in the role for just over two years now. There aren’t many finance bosses who’ve already been a media CEO.
Stanton is an accountant by background who came into the media industry via Emap Australia which was soon after taken over by ACP Magazines, and in turn became Bauer Australia (and a while after Stanton’s exit, Are Media).
That stint as CEO gave him a front row seat for the demise of magazines as a mass print medium. My main recollection of Stanton’s magazine years was occasionally interviewing him on stage where he’d acknowledge how the magazine industry had been doing a poor job at marketing itself and pledge to do better.
After a stint with Woolworths, Stanton’s next crossover with the media and marketing world came when he was brought in to do damage control on Isentia’s disastrous acquisition of King Content just as the content marketing bubble burst. The company closed within a year of his arrival.
Now Stanton finds himself in the finance hotseat at Nine just as the company faces similarly tricky pressures. The Facebook money is about to vanish from the publishing operation; TV audiences are in rapid decline; advertising is in recession; Stan’s subscriber base seems to have started to fall and there’ll be a big bill for the Olympics acquisition which he masterminded. Stanton’s salary hasn’t been disclosed yet, but whatever it is, he’ll earn it.
The Week in AI: Job fears and lollies
Cat McGinn writes:
Rising AInxiety
A study released at Advertising Week APAC into the adoption of artificial intelligence revealed 75% of Australians said they were anxious about AI integration at work, with their fears including job replacement and reduced creativity.
Those with experience of AI tools expressed more concerns, but were also more likely to advocate for its wider use. Half of the workers currently using AI tools in the workplace haven’t disclosed this to their managers.
Gen Z and Millennials express greater concern about its impact. Only half of Baby Boomers have used AI tools, versus 90% of Zoomers who have used the technology.
Nothing is true, everything is permitted
Instagram appears to be working on a label for AI-generated content, it emerged this week. AI-created influencers like Lil Miquela, Imma, and Shudu have amassed over eight million followers and million-dollar brand deals. These digital influencers pose a low risk in terms of brand safety, and reduced costs for marketers; however there are concerns that their use could increase unrealistic self-perceptions among users.
The virtual influencer market is now estimated to be worth over US$3 billion
Put a pin in that
During the company’s Q2 2023 earnings call Pinterest cited its AI investment as key in driving 8% global monthly active user growth to 465 million, and increased user engagement. The update for investors detailed results from the pinboarding site’s multiyear partnership with Amazon, saying it was progressing faster than anticipated, via third-party ads, with meaningful revenue impacts expected in 2024. Pinterest’s use of AI technologies has helped increase ad relevance and user engagement, said CEO Bill Ready.
TAIking care of business
A report by Goldman Sachs and the Stanford Institute for Human-Centered Artificial Intelligence predicts global AI investment could reach $200 billion by 2025, potentially boosting global labour productivity by more than 1 percentage point a year in the decade following widespread usage. Despite the impact on GDP and other potential benefits, significant upfront investment in physical, digital, and human capital is required for large-scale transformation. Concerns about privacy and job displacement persist alongside this growth.
Campaign of the Week: Lucky scarf
In each edition of BOTW, our friends at Little Black Book Online highlight their most interesting advertising campaign of the week.
LBB’s AUNZ reporter Casey Martin said:
This week’s campaign comes from Ogilvy for Cadbury. Stitching together a myriad of lucky charms from Wallabies fans of every age to create a giant scarf, Ogilvy and Cadbury showcased the love Aussies have for the game and the athletes in a heartwarming spot.
Unmade Index sends the week off with a sweetener
Seja Al Zaidi writes:
The week ended with an upswing on the Unmade Index, ending 1.68% higher after a week of mostly negative performance. The Index, which tracks the performance of ASX-listed media and marketing stocks, rose to 696.8 points yesterday.
All of the larger stocks saw boosts in their share price. Seven West Media enjoyed a 5.26% increase in share price, while marketing and printing firm IVE Group rose 6.99%.
Nine, the biggest stock on the Index, lifted 1.42% and Domain followed with a 1% rise. Ooh Media scored a modest 0.36% lift, and ARN Media rose 1.47%.
Southern Cross Austereo dropped 0.53%, while communications company Enero Group fell 5.04%.
Tim to leave you to your Saturday.
Seja, Abe Udy and I will be back on Monday with Start the Week.
Have a great weekend.
Toodlepip…
Tim Burrowes
Publisher – Unmade
tim@unmade.media
