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Media Intelligence : 2009 - 2010
state of play Business models will change Martin Cowie MD, Carat Where are agencies feeling the pinch? Any agency dependent upon international clients will be doing it tough. With most Australian retailers doing okay at the moment – cars excepted – sales and marketing budgets are holding up. What is your forecast for the industry over the next twelve months? This is the $64m question and one that every business person as well as political leader is asking! The decline in Australia has been steep but not unpredicted as we have followed the path of Europe and the USA into recession. There are the fi rst, albeit inconsistent, signs of the fi rst green shoots of recovery, through a slowing in the year on year decline in marketing expenditure. After double digit declines in the fi rst half of ’09 it is likely that a not too dissimilar pattern will continue for the rest of the year. 2010 is the great unknown but it is likely that most of the bad news will be out on the table by then and a period of stability may ensue with fl at year on year spends. Which media segments are generating interest in agencies at the moment? It is a fascinating time across all media segments at the moment. Clearly the continued growth in social media channels has now made this area a must-have on all marketing plans. How best to use these channels is proving as big a challenge for media agencies as it is for the social media owners to monetise their ever-increasing eyeballs. The dramatic decline in magazine circulations has taken most people by surprise with the big question being: Has Australia’s love affair with magazines been broken for the long term? It is television that is creating great intrigue amongst most forward thinking media agencies. The dramatic declines in advertising revenue should fi nally bring the programmers and sales people together to entertain more brand funded content. The interruption model has a limited shelf life and TV is likely to suffer most unless it can unhook itself from the 30 second ad and think more laterally about other revenue sources. 13 MEDIA Trends + Strategy p11-15_stateOfPlay.indd 12 p11-15_stateOfPlay.indd 12 3/7/09 11:50:56 AM 3/7/09 11:50:56 AM Many Australian media agencies have not lived through a recession and those without good ROI analysis capabilities will not be able to deliver the quantifi able returns that CFOs are now demanding from their marketing dollars. Redundancy has unfortunately become the easy lever for companies to keep EBIT targets in line. Thankfully at Carat we saw the recession coming and have managed resource levels naturally to avoid redundancies. Who will be the media winners when we emerge from the downturn? The business model never stays the same after a recession. The greater focus on ROI will leave all digital mediums in a stronger position. Those media used more for branding, such as magazines and TV, will have to fi nd different ways of selling their media to compete. Radio and newspapers will continue to fare better as they are great retail environments and can be used in the short term with relatively low production costs. Out-of-home will hold steady as a mass-reaching medium, particularly as television continues to fragment. How are you approaching measurement now, and looking forward? Carat was the fi rst agency to introduce econometric modelling and we are again leading the way in the use of data both in ROI analysis and in bottom-up campaign planning. Aegis, Carat’s holding company, also includes Isobar, iProspect and Apollo Marketing, all of which have capabilities in web build, search and sales promotion. It is the combination of these areas that gives Carat a competitive advantage in delivering integrated solutions to our clients. Unless a client has a strategy across Bought (traditional media), Owned (client’s own media such as web-sites, packaging etc) and Earned (social media) then they will not be equipped for the rapidly changing future. Our companies under the Aegis umbrella are specifi cally aligned to deliver these solutions to our clients. Amalgamation to increase Mark Champion Executive Director, Advertising Federation of Australia What are the main challenges facing agencies at the moment? I think this is the time to increase competitiveness, and many agencies will need to because of the decline. We have seen evidence of this already. The business demands – profi tability – don’t go away. A lot of it at the moment is around working harder and smarter to retain business, and to service the clients as well as possible. Will we see much amalgamation between agencies? There is always amalgamation. I don’t think we are going to see more of it, unless they are real bargains. Being debt free would be a fantastic place to be right now in any business, because the servicing of debt would be a killer in a time where revenues are fl at. How are you working with other industry associations? We have tried very hard to work alongside other bodies, but there appears to be resistance. I come from a different market where working alongside other industry bodies is just the way in which you operate. This market is different for reasons I can’t explain, but in many ways, industry associations are not serving industry in the best possible way because of that lack of co-ordination. There is a proliferation of industry bodies in this market and I do think that everybody likes their own slice of the pie and they aren’t prepared to give it away in any shape or form. It would take a major shock for industry associations to actually start serving the industries they represent. We have gone a long way to try and work with others who feel the same way as us – we have worked well with the AANA – but there are a lot of old attitudes. What do advertising decision makers need to keep in mind especially in light of the economic climate? For all of us it is the same message. It’s not just during the good times that we should be marketing our products, but it’s even more important when times are tough to continue to market your brand and stand above the crowd. And we have seen some interesting political solutions too. Who would have thought we’d have the US government bailing out banks! Keynesian economics is back. We have seen a lot of strange behaviour, but what we have seen is a government who realises it can’t turn off the tap like it did last time in ’89/’90. We have to take a different approach. Marketers and clients also have to take that view.
MT Resource 2010