The Long View

Mon, 6 Apr 2009 | By Danielle Long

Rock bottom - 06.04.09

Today’s Bellwether Report from the IPA offered some optimism with indications that the rate of decline in marketing budgets was easing, having hit the bottom in Q4.

The Q1 report, released today, revealed online advertising suffered a record reduction in ad spend, but the rate of cuts to online budgets was weaker than total marketing spend.

The report finds online’s stronger performance, when compared with the main media, led to a gain in share with the medium now accounting for almost 10% of ad spend.

It follows last week’s IAB report, which found online ad spend had increased to account for 19.2% of total UK ad spend in 2008.

That online would perform better than the other sectors is no doubt stating the bleedingly obvious to anyone reading this. The sector has been beating the ROI drum since time immemorial and it’s a tune that has been getting louder and louder as the market tightens.

And it’s working.

Slimmed down advertising budgets are being adjusted with increased spends being allocated to online as clients see more bang for their buck.

But as marketers and agencies focus on driving ROI it’s more important than ever that online creativity is promoted and celebrated.

Focusing on getting cut-through and stand out should not come at the expense of a great creative idea, especially a well executed one.

The standard acceptance is that an economic downturn forces people to be more creative in order to achieve stronger results. This should apply to online as much as any other sector.

It’s more crucial than ever that online advertising pushes the creative and innovative boundaries this year, if it’s to establish its place as a branding platform as well as direct response.

 

Confidence boost - 30.03.09

This morning the seventh annual Census survey was released by the Association of Online Publishers (AOP) and paints a rosy view of the year ahead, writes Justin Pearse, editor of new media age.

 Industry bodies are of course duty bound to cast the brightest light possible on their respective industries but the confidence doesn’t appear to be that far from the truth when talking to online publishers, agencies and advertisers.

Overall the AOP survey finds publishers predicting a 16% growth in digital revenues for the year ahead. While this may appear insanely confident compared to the collapse of most other industries, in fact this is a relatively sober assessment of the industry’s potential. The figure includes everything from online advertising to paid content and ecommerce.

While the online display model is under severe strain, new techniques, most strikingly behavioural targeting, are being taken up strongly by publishers. Behavioural targeting, given a boost recently by both the IAB’s guidelines and Google’s entry into the market, should play a key role in the year ahead in helping publishers attract and retain advertisers.

But it’s going to be the supplemental activities, such as ecommerce, that are likely to play an even bigger role in supporting publisher revenues, as argued by our columnist Simon Waldman in last week’s magazine (nma26 March).

Which is why it’s slightly disappointing to see only 28% of respondents to the AOP Census planning to invest more in technology and innovation. When 63% of respondents said they planned to increase their digital investment this year, it would be healthier to see more being earmarked for this area. The online arms race shows no signs of slowing this year, despite the recession, and as publishers expand to potentially lucrative new areas, technology and innovation will be more crucial than ever.

 

Subscription model - 23.03.09

The Economist last week ran an editorial heralding the end of free online content as companies scramble for ways to attract significant online revenues.

The piece came as increasing numbers of media companies, particularly publishers, look to subscription models and paid-for content for their online properties in a bid to turn their dwindling fortunes.

Last week the Independent News & Media’s new CEO Gavin O’Reilly predicted the migration of more content behind subscription walls, as companies attempt to recoup costs.

The Independent is not alone, with reports suggesting Times Online, Time.com and The New York Times among others are looking to introduce the measures which have continued to work effectively for the likes of FT.com and The Wall Street Journal.

But can media companies successfully shift users to this model when a growing generation has come to expect to receive everything online for free?

It’s becoming abundantly clear that online services such as YouTube and Facebook are seriously struggling to attract the sorts of revenues to make the models viable as free platforms.

However, any move to put up subscription walls would see users fleeing the services in droves. A Facebook group, “We Will Not Pay To Use Facebook. We Are Gone If This Happens” has over 2m members.

The recent spat between PRS for Music and YouTube, which saw the video sharing site pull down all UK music videos after a breakdown in negotiations, further highlighted the difficulties the free/ad-funded model is facing.

The PRS spat, along with an ongoing licensing fee row between Google and Warner Music, is yet another example of  the market’s impatience with Google’s failure to effectively monetise YouTube.

Today’s news that Bebo is no longer funding original web content is just the latest blow to an online industry that must move quickly to create models that work if anyone is to make any money.

It’s increasingly clear that ad funding can only go so far, and without any other decent alternatives, we might see more and more companies jumping on board the pay model.

 

Going mainstream - 16.03.09

Is behavioural targeting set to hit the tipping point?

In recent weeks the practice has come under the media spotlight for the right reasons for once, as a number of major industry players jumped on board to support the IAB’s launch of good practice guidelines for behavioural targeting.

The likes of Google, AOL, Microsoft, Yahoo and Phorm, to name a few, joined with the IAB to endorse the guidelines, which also called for greater consumer education in a bid to settle the privacy furore that was ignited by Phorm.

Then last week market heavyweight Google waded in further with the launch of a beta trial of what it’s calling interest-based advertising across the Google Content Network and YouTube.

The trial will give advertisers the opportunity to use the search giant’s broad reach to target users with relevant ads and will no doubt help push the practice over the tipping point and into the mainstream.

Google’s move into behavioural targeting has been long anticipated after the search giant bought ad serving specialists DoubleClick in 2008, it’s by no means anything new, but the presence of Google will help drive advertisers to the practice like never before.

In a bid to silence privacy campaigners Google has opened up its profiles to the public, enabling users to access and edit their profile and interest areas to ensure greater targeting for advertisers and give the consumer more control of the advertising they receive.

While the privacy campaigners are still not happy with the overall practice, the move has been mostly endorsed by industry experts who have welcomed Google’s arrival to the landscape.

There’s no denying the sheer size and weight of Google will help thrust the practice into consumers lives.

And with control in the consumers’ hands, it may just help the advertisers feel comfortable enough to use behavioural targeting on a wide scale and finally see the market reap the benefits of the lucrative practice.

 

Past friendships - 09.03.09

So ITV has finally given up on Friends Reunited and is looking to flog it. But as the economic crisis deepens, who on earth would buy the social network?

Bought by ITV for a staggering £120m in 2005, Friends Reunited was the first breakthrough social networking site. ITV predicted big things for it, but the market suspected the broadcaster had overpaid in its rush to jump on the online bandwagon.

In the following years, Friends Reunited floundered under ITV as the broadcaster struggled to work out what to do with the site. It tried sub-brands such as Genes Reunited and Friends Reunited Dating, both of which failed to set the world on fire.

A lack of promotion and moving too late to drop the site’s subscription charges saw its star dwindle as the likes of Facebook stormed past it and hoovered up its audience.

In the UK, Friends Reunited is the sixth most popular social networking site, behind the usual suspects of Facebook and MySpace, according to Hitwise. However, an examination of the numbers shows Facebook light years ahead, with just under 22m users in January to Friends Reunited’s 1.8m, according to ComScore.

Market speculation now prices the site at about £50m, but that’s if there’s anyone willing to shell out for it in the current climate. In the past it was easy to conceive that a few publishers might step in to purchase the site, but with their current challenges it’s likely none will.

Friends Reunited might be able to attract some attention from online dating sites keen to widen their audiences and tap into the unrequited schooldays crush market. But as one analyst put it, the days of AOL shelling out $850m for Bebo are a long time past. It’s fair to say the chances of ITV getting the price it wants are very slim.

 

Ticking the boxes - 02.03.09

If you can’t beat ‘em, just pull ‘em all together on a website. That seems to be the idea behind the new Skittles.com website - Interweb the Rainbow - which pulls all its social media brand channels together in one central location.

Visit Twitter today and you’ll notice the site is buzzing with posts about Skittles. The chatter follows the move by the rainbow-tasting sweet brand to replace its home page with a live Twitter feed of people talking about the brand. And in doing so, it has created a site of live feeds of people talking about the site’s live feeds of people talking about the site. Phew.

It’s not just Twitter, though. The site also links to the Skittles Facebook page, complete with half a million-plus friends, its less popular YouTube channel featuring Skittles advertising and its Flickr page of product shots.

I can’t shake the image of the marketing team sitting down to discuss how they can use all this social media stuff to create a cool site that’s down with the kids… wait I know, let’s just whack ‘em altogether - brilliant! Sure it creates a hell of a buzz about the brand and will drive people to the site in droves just to check it out. But once the gimmick is over, does it really offer the user any value?

As soon as I got there I wanted to play, but there was nothing to play with. Just an updating Twitter feed, a static Facebook page, some ads on YouTube, some product shots and the obligatory nutritional information.

The site, created by Agency.com in the US, has been praised for its bravery, but its originality has been questioned, with critics quick to draw similarities to the site of US ad agency Modernista. Skittles said the site aims to give more control to users, but these social media touchpoints already existed for anyone who wanted to engage with the brand and user participation on the site is likely to be closely moderated.

It’s fair to say Skittles has pulled off an innovative first here for a consumer-facing brand, but the whole thing smacks of ticking boxes on a Web 2.0 checklist.

 

Back to basics - 23.02.09

Last week new media age unveiled MTV’s plans to roll out MTV music, its music video library in the UK (new media age 19 February). The launch forms a major part of an ambitious strategy to offer a global archive of the music brand’s heritage of music videos online.

It’s a significant step by the company, which of late has become more known for its programming such as The Osbournes, The Hills or Kerry Katona: Crazy in Love, than its music kudos. Despite this move towards reality programming, MTV has maintained its reputation as a music brand online and it’s this foundation that the brand hopes to build on to become a global music video hub.

It’s a lofty goal but not an unachievable one. The US version, currently in beta, has been described as the music version of Hulu, the widely successful video-on-demand service from NBC and News Corp. If MTV can pull off a similar move - that is, push its content out to wider audiences via branded players, something it maintains is high on the agenda - it may just be able to make some decent money from advertisers and sponsors.

There’s an element of what took you so long about this venture. MTV fans, particularly those who were teenagers in the 1980s and 1990s, have long bemoaned the music channel’s changing face as it stopped being ‘all about the music’ and morphed into a celebrity and reality TV hub. It’s lovely to see MTV readying for a storming return to a place that many believe is the heartland of the MTV brand.

Nothing screams MTV more than a youth-focused music video venture, But given the brand’s predominantly 18-24-year-old audience have probably never heard the iconic strains of Dire Strait’s ‘Money for Nothing’, it’s yet to be seen if this audience will want their MTV.

But I suspect a number of embarrassing oldies will.

 

Failing to deliver - 16.02.09

With so much chatter about broadcasters’ online video-on-demand services, it’s easy to overlook the elephant in the room that is the behemoth YouTube.

The Google-owned video-sharing site remains the market leader, accounting for a massive 23m of the total 30m UK online video audience - well ahead of BBC sites including iPlayer, which attracted just under 7m in December 2008 - according to ComScore figures. What’s perhaps more impressive is that YouTube accounts for 33% of all minutes spent viewing video online, while BBC, Channel 4, ITV and Five together account for less than 5%.

It’s an impressive feat. These sort of stats help Google justify the high rates of YouTube advertising. But how relevant is an expandable home-page ad given people don’t tend to spend much time on the home page?  And that’s if they land there at all, with a vast majority of traffic to the site coming from external links to content.

Concerns that YouTube is pricing itself out of the market are nothing new. Major advertisers have long been concerned about the exorbitant prices and media agencies continue to struggle to sell in such high rates to clients. Google is working hard to find alternatives and continues to roll out trials of new formats. Its latest moneyspinner, a video download trial for free and paid-for videos, looks unlikely to deliver any substantial revenues for the company, with most users likely to spurn download models in favour of streaming.

Last month it rolled out a host of new online ad formats including masthead rockblock ads, autoroll ads and click-to-play video, yet all these formats were for the home page. With the market crying out for ways to monetise online video content, does Google see the answer in its home page?

One thing is certain: the longer Google struggles to monetise this beast, the harder it gets.

 

Platform of choice - 09.02.09

In this column a few weeks ago I predicted Stephen Carter’s vision of greater market collaboration in Digital Britain might help Kangaroo limp across the line.

I was wrong.

Despite Carter’s blueprint calling for the market to work together to cement the UK as a world leading digital market, the Competition Commission has decided the joint venture would be anti-competitive for the UK market.

The decision has not surprised many, the ambitious VoD service had looked doomed to many since Ashley Highfield’s departure to Microsoft, which many took to be an early warning bell.

All may not be lost however, with speculation that two of the shareholders may still lobby the CC to launch a trimmed down version of the venture, or that one of them may acquire part of the platform to upgrade or integrate their own service.

Whatever the outcome, they’ll need to move quickly.

Analysts believe the shareholders have lost ground with their own services by putting all their eggs in the Kangaroo basket. BBC Worldwide is particularly lost, given its commercial iPlayer plans were shelved in favour of Kangaroo.

And one of the surprising winners has been Channel Five, which has been plugging away with its free Demand Five service to great effect and has doubled its users between June and October, according to Thinkbox research.

But with audience interest in online TV growing rapidly and users searching for a single entry point, another potential winner could be Sky.

The Sky Player is well placed to be the aggregator platform of choice - particularly as the media giant steps up its plans to push its player out to partner sites and onto new platforms - a la iPlayer strategy.

It’s a compelling play, replicating the Sky TV experience online and opening it up to anyone who wants to pay for it. It’s a crafty plan and it could just give Sky a jump on the competition.

But, the big question remains, just how willing are people to pay for content?

 

Digital nation - 02.02.09

After much anticipation, Lord Stephen Carter last week unveiled his interim Digital Britain report, and the 22-point plan didn’t disappoint.

The blueprint proposed infrastructure upgrades and stronger investment in digital content and services among a host of proposals. But central to the report was Carter’s vision of the UK’s status as a world-leading digital capital. At every turn in the wide-ranging report he took the opportunity to promote the need to invest in and develop UK digital content to ensure the market’s future.

The report pushed the need for new models to ensure the digital content markets could support strong commercial businesses, saying new business models and incentive structures will be crucial for the sector’s future.

Digital Britain argues that counter-piracy measures and effective rights enforcement are important elements in the push for more digital content, but that new business models would form an equally if not more important role in continuing the UK’s dominance as a global leader in content.

UK content production accounts for more than 6% of UK gross value, the equivalent in scale to the financial industry, and we all know what shape that market is in at the moment. With the content sector already facing revenue pressures, it’s essential the Government act fast to provide strong investment to develop infrastructure and new models that don’t rely on outdated media models.

Proposals such as a rights agency to create a body to establish counter-piracy measures and incentivised models for legitimate downloading are a step in the right direction, but this body would need power and jurisdiction to enforce action and not get weighed down by political interests.

It won’t be an easy task, but the creation of such a body could help the industry prosper and could fulfil Carter’s ambitions to put the UK at the top of the global table for content. But it won’t come quickly. Carter’s completed report isn’t due until the summer and, as the snow falls outside, his ambitions seem a very long way away. 

 

The next big thing - 26.01.09

Ad-funded content has long been the fabled holy ground for brands desperate to target online audiences. And everyone - ad agencies, digital agencies, production companies, brands, digital media start-ups - is keen to get on board and produce the next big thing online.

But with so many cooks in the kitchen fighting for a piece of the action, the ad-funded model runs the risk of derailing itself.

In recent months new media age has reported on a number of online series that are failing to attract attention from commercial partners (nma22 January). Yet with so many series rolling out, with or without commercial backing, there is a danger that the market, particularly for teen audiences, could become oversupplied. What’s more, a lack of recommissions suggest this content may not be as lucrative as hoped.

So Endemol’s Cell may well be a standout for the sector to champion. Originally produced as a made for mobile blockbuster on O2, it was picked up by Sony Pictures and rolled out online via Thecell.tv, Crackle.com in the US and last week launched on Blogbang in France. The success of Cell and others such as Sofia’s Diary and Bite proves the model can and does work. But it’s crucial that there are more such examples for the sector to champion if it’s to continue to flourish.

Online dramas require new models of pricing and producing. Content for the sake of it will not work. Nor will just another online drama series aimed at the teenage market. There’s a need to learn from these successful teen dramas and build on the findings to help widen the remit out to other age groups. The market needs to begin creating content for older audiences if it intends to grow the market and boost the sector.

 

Leader of the pack - 19.01.09

The industry is buzzing ahead of Stephen Carter’s much-anticipated Digital Britain report, but let’s not forget the compelling vision at the centre of Carter’s report: the aim to make the UK a world-leading digital creative capital.

Speaking last week, Carter hinted at a need to create greater opportunities and protection for the creative industries, in order to help the UK become a location of choice for the content industries. The plan is to create the regulatory framework and structures to help shape a Britain that is fit for purpose in the digital future.

Reports today suggest Carter will push for BBC Worldwide to be freed from its regulatory shackles to allow the commercial organisation to become a “British rights company on the global stage”.

It’s part of Carter’s vision to ensure British content continues to be exported around the world in order to reap the economic and cultural benefits. With the UK largely viewed as a leader in digital advertising, it’s time the content and technology industries were awarded the same kudos.

Carter’s vision is imperative as the global content market accelerates. The UK market needs to create infrastructures that support the nurturing and growth of home grown talent and businesses.

Channel 4 CEO Andy Duncan has said the report could be one of the most important elements in deciding how the UK competes in the global economy. He believes it could determine how Britain contributes culturally, creatively and economically through the turbulent times ahead and has urged the UK media industry to work together to support the UK’s cultural and economic future. Duncan’s not wrong on this point. The potential to create an established vision is both necessary and inspiring - if it works.

Interestingly this comes ahead of the Competition Commission’s decision on Project Kangaroo due early next month. While local rivals and the CC itself have major concerns about the potential lessening of competition in the UK market, the shareholders - ITV, Channel 4 and BBC Worldwide - have always argued that Kangaroo is crucial to the UK’s ability to compete on a global stage as the likes of Hulu and iTunes continue to grow internationally.

With Carter’s vision likely to stir up much debate in this area, is it possible that the controversial video-on demand service may still manage to limp across the line?

 

Streamlining - 12.01.09

As the industry braces for a tough 2009, the digital sector has contracted a kind of collective whiplash as it strains to see who or where the recession will hit.

The digital agencies that are yet to really feel the pinch are anxiously watching their peers for any signs of trouble.

Today’s Bellwether report brings worrying news with the IPA reporting that 45% of companies are planning to cut their marketing spend this year which will undoubtedly lead to further redundancies across the industry.

While the digital agency redundancies started a few months ago, these have remained at a trickle level with no signs yet that a major flood is set to hit.

But as the redundancies occur and digital staff are let go, most agencies are still on the hunt for staff.

In fact a number of the agencies I’ve spoken to in recent months that have made redundancies did so while pushing out a number of briefs for new recruits.

An interesting trend is occurring in the sector as digital agencies use the economic crisis to remove some of the less talented and under performing individuals in a bid to improve output. In effect, the recession is creating the opportunity to strip out the dead wood and create stronger, more efficient teams.

It’s also serving to bring salaries down from the inflated highs of recent years and return them to a sobering level.

All in all, it may be fair to say that in these early days, the recession could help the digital market mature a little and help agencies emerge as leaner, sleeker and more efficient beasts.

 

Risky business - 16.07.08

Is it a dangerous time to have digital in your job title?

It seems these days not a week goes by without the axing of a digital director or two as companies increasingly shave down digital staff.

Restructures are seeing digital pulled out of its ghetto and integrated into businesses through mergers with comms planning and marketing departments.

In recent weeks, Bauer has axed the digital sales director role, Johnston Press dumped its digital publishing director role and TIML-owned Virgin Media dropped its digital director when it merged its digital and marketing departments.

It’s a sign of optimism from media companies who believe and understand that digital is an integral part of their business, and so should be treated accordingly. But, will the loss of so many digital experts, come at the expense of digital innovation?

This week’s Bellwether Report revealed there’s still growth in the market. Despite the downwards trends overall, internet ad spend grew 6% in Q2, although this is well below market forecasts and the smallest increase the market has seen since 2002.

At a time when budgets are shrinking and clients are spending less, the very people well placed to help drive digital innovation may not be there if this trend continues.

Digital remains the shining star in the ad market. Let’s hope the industry can maintain this.

 

Tough competition - 02.07.08

This week’s move by The Office of Fair Trading to refer Kangaroo, the joint venture on-demand service from the BBC Worldwide, ITV and Channel 4, to the Competition Commission has ruffled feathers far and wide.

It’s a toughie too, because both arguments are fairly compelling.

On one side, it’s easy to see the arguments around the so called ‘monopoly’, if users can go to one platform and get all the content they want and need - be it free or otherwise - it’s obvious to see why competitors like Sky, Joost, Virgin Media et al are against the venture.

However, the follow-on effect that such an undoubtedly impressive service will provide to the on-demand market in the UK is undeniable. As TV audiences dwindle, the more people going online for content the better, right?

And, whichever side of the fence you sit on the potential implications for pricing are of significant importance to the marketplace.

Those against Kangaroo have readily bandied about terms such as ‘monopoly’ and ‘cartel’. But, if we live in a truly global digital world, then it’s necessary that the UK competes on such a stage and if so Kangaroo would surely be a great example of the UK’s best, particularly if Five and other broadcasters jump on board.

Kangaroo and particularly ITV chairman Michael Grade have argued that the delay to Kangaroo will only benefit non-UK players such as Apple and Google who will benefit from attracting UK audiences, to the disadvantage of UK advertisers, producers and viewers.

But, while the broadcasters fight for their piece of pie, perhaps one of the most significant points is being missed - how can the on-demand market be monetised?

Advertisers are reluctant to jump on board a still untested market, with ongoing discussions around CPMs and the merits of pre and post-roll ads versus overlays or otherwise, and none of the players are yet to come up with a workable pricing model for content.

NMA reported this week on ComScore research, which revealed UK audiences were leading the way in online video consumption, with 27.4m UK users tuning in online. Almost half of these viewers were watching via YouTube, which leaves the UK’s traditional broadcasters a long way behind the curve.

The CC has quite a task ahead of it if it hopes to wade through this mess and come up with a solution. As one production company head put it: “You’re damned if you do and you’re damned if you don’t.”

But perhaps the real hurdle for the marketplace is working out just how anyone, cartels or otherwise, can actually make some money from on-demand. Maybe this is where the real debate should be taking place?

 

Can-do attitude - 20.06.08

The Cyber Lions Awards at Cannes this year were a triumph for the little guys. Small independent agencies were up against, and in many cases beat, the heavyweights to take home gongs.

From a shortlist rich with hotshops like AKQA, FarFar, Crispin Porter + Bogusky, R/GA and North Kingdom, small shops like Japan’s Projector - a two-man team - and the UK’s 21-strong Lean Mean Fighting Machine walked away with the some of the highest honours.

That’s not to say the big guys didn’t pick up plaudits as well. All the agencies listed above won something, but it was the little-known names that took the Grand Prix: Oslo’s Mediafront, 42 Entertainment in the US and Projector.

Lean Mean’s storming performance to win Cyber Agency of the Year, along with two golds, a silver and a bronze Lion, has not only firmly established the creative shop’s presence on the international stage, it has helped restore the reputation of the overall UK market.

After what was slated as a lacklustre performance at Cannes last year, the UK digital industry stepped up to the podium to collect 11 coveted Cyber Lions, won by Poke, Glue, BBH, BMB, Archibald Ingall Stretton and The Viral Factory.

It was a bigger swag than achieved by the much-lauded creative hotshops in Brazil and Sweden, and just behind the US, which bagged 15 gongs.

As one Cyber Lions judge told NMA, “For banners, the UK owns online advertising.”

There’s no denying the market needs to continue to push this creativity and drive innovation across the sector, but this year’s festival has proven the UK digital market is in healthy shape.