It was Queen Elizabeth II who popularised this phrase, which is Latin for ‘horrible year’.  In late 1992, after Prince Andrew and Sarah Ferguson split up, Windsor Castle caught fire, Princess Anne divorced Mark Phillips, the tell-all biography ‘Diana Her True Story’ was published,

QE2 stated that: “1992 is not a year on which I shall look back with undiluted pleasure. In the words of one of my more sympathetic correspondents, it has turned out to be an Annus Horribilis.”

There are likely to be more than a few marketing and advertising professionals from around the globe saying the same thing about the year from October ‘08 to September ‘09.

This section sets the scene for the hypothesis that the recession has created a structural change in the way consumers engage with media and the way the industry buys media.  Online advertising has defied the recession and Television and Newspapers have been particularly hard hit.

What Can we Expect from the Future.

The recession has given us a chance to reassess what’s worked for the good years, throw out the stuff that didn’t, or that we can’t measure the success of, and hit the restart button.

Don’t expect gross media spend to increase any time soon, due to the disinflationary aspect of online (simply put: buy more for less) and watch out for online to take over radio and magazine.

POST PRESENTATION:  Here’s an interesting article from Australian Financial Review that came out following the presentation.  It updates previously pessimistic growth forecasts for the Australian media sector.

Who’s looking online?

Some interesting (hopefully!) stats about the growth of the online sector.

So What to do?

Here are nine for your ‘To Do’ list.  I covered them off more fully in the presentation.  You should have been there

The advertising industry quickly felt the pain of tightening consumer spending and budget reductions.  The media sector who largely derive their revenue from the sale of display advertising, retrenched and started to report massive profit declines and quarterly losses.

The industry is only now starting to see a recovery but the burning question for many media outlets is ‘was the downturn cyclic, or has the recession created a structural change in the way advertisers buy media and how consumers engage?’.

Across the media sector, all players were feeling the pain but the leading two offline media,  Television and Newspaper, felt falling revenues more than most.

I’m reminded of a schoolboy rugby line my father often quoted to me: “the bigger they are, the harder they fall.”

Well, they fell hard.

In the three months to December ‘08, Rupert Murdoch’s NewsCorp announced a US$6.4B loss compared to an US$832M profit for the same period a year earlier.

Across the media sector, all players were feeling the pain but the leading two offline media,  Television and Newspaper, felt falling revenues more than most.

I’m reminded of a schoolboy rugby line my father often quoted to me: “the bigger they are, the harder they fall.”

Well, they fell hard.

The pain of the advertising downturn was felt across all media.  Except online which, despite seeing growth decline on previous years, has shown a surprising resilience in the face of massive advertising price cuts across the leading media of newspapers and television.

In the UK, by June ‘09, spend on online advertising (including search, classified and display), had overtaken television revenue for the first time.

Whilst television spending in the UK had dropped by over 16%, online ad spend lifted 4.6% in the toughest economic environment since the Internet was born.

On the same day as the BBC in the UK proclaimed online as that country’s leading advertising medium, and only twelve months since the Lehman Brothers collapse, back here in New Zealand, TVNZ reported a 5.4% decline in reported advertising revenue and a drop in profit of a massive 89% on the previous full financial year.

For the first six months of this year, the New Zealand Television Broadcasters Council (NZTBC) reported a 13.3% decline in ad spend.  For the same six months, here in New Zealand, the Interactive Advertising Bureau announced a lift in online display advertising of over 10%.

Of course, in New Zealand, where online made up only 8% of all ad spend in 2008, this sector is not going to topple newspapers and television this year.  But it will happen.

]]> http://www.dontwasteagoodrecession.com/?feed=rss2&p=16 0 http://www.dontwasteagoodrecession.com/?p=14 http://www.dontwasteagoodrecession.com/?p=14#comments Wed, 28 Oct 2009 10:06:26 +0000 MG http://www.dontwasteagoodrecession.com/?p=14 Samuel “Sam” Zell has an estimated net worth of ~US$3 billion, Forbes Mag estimated that he was the 68th richest American. he owns The Tribune Company, publisher of the Chicago Tribune and the Los Angeles Times, they own a radio station and about 23 TV stations across the US.  They’re America’s second largest Newspaper publisher with 12 significant mastheads. Since taking over The Tribune Company in 2007 with an $8B investment, Sam has faced double digit revenue declines. The Tribune Company filed for Chapter 11 Bankruptcy on December 8, 2008 and the debt from its acquisition is now 9 times its EBITDA or earnings before interest & tax. It’s wasn’t his smartest investment … Listen to what he says right at the end of this piece.

It’s a cyclic downturn

The convergent analysis of industry sources suggests that the media sector is roughly halfway through a two year cyclic downturn that became clearly evident in September ’08.

Accountability is king and the media sector is seeing advertising dollars move to interactive media where results can be proven.

Structural change is underway

I recall listening to Harold Mitchell predicting online spend will equal or better TV and newspapers by 2013 in Australia.  If anyone knows, it will be him.  Mitchell Communication Group is the largest buyer of media in Australia.

The adoption growth curve for online advertising in New Zealand lags behind the western markets of UK, USA and Australia, but the present impact of online cannot be discounted in our domestic market.

The disinflationary aspect of transferring print and television spend into online media will impact total adspend growth for some time. All this means that the surge of online advertising revenue in New Zealand will surpass radio and magazines over the next two years but total advertising spend across all media is likely to remain fairly constant, with the post-recession money moving off television and print onto interactive advertising.

“Spending will be down 7 per cent across 2009.  The drop was higher in the first half, so for the second half we’re predicting a decline of 5 per cent.  Ad spending in 2010 will be flat.”

Harold Mitchell, Mitchell Communication Group.
Source: Australian Financial Review 3rd August 2009.

Of the top ten US mastheads, only one masthead gained ground.  Tough business.

On the internet front, things are looking rosier.  Budde reports that “while global Internet bandwidth expanded by around 64% in 2009; Internet traffic was expected to grow by over 70%.   A study by Telegeography found that much of the demand is coming from the emerging markets, such as the Middle East where traffic growth is expected to reach 116%.  In contrast the US will grow by 56%.”

56% is not bad growth for a maturing medium.

Growth of Broadband and Internet access

Broadband subscriber numbers rose 27 percent in the 15 months to June to 1.1 million.
Source: Statistics New Zealand (SNZ)

87% of New Zealanders have access to the Internet and 67% go online every day.
Source: Nielsen Panorama Survey (Jan – Dec 2008)

Time spent online averages 13 hrs per week – that’s over half a day every week.
Source: Nielsen Online Market Intelligence 2009

Some stuff on Trade Me

Trade Me serves around 66% of New Zealand domestic recorded page impressions
Source: Nielsen Online September 2009

Advertising Revenues

Back in NZ, for the full calendar year of 2008, we saw a continuation of the decline in newspapers and television adspend.  And a steady climb in interactive advertising.  It will be fascinating to see the annual results for 2009 once they are published.  I predict a very significant decline in Television and Newspaper revenues and a lift of Interactive revenue (as audited by PwC) to be over 10% of all media spend, getting very close to passing magazines and radio.

•  An excuse to throw out stuff that doesn’t work or that you can’t measure

•  Hit the restart button

•  Try new stuff!

•  Get across social media

•  But don’t forget about REACH & FREQUENCY

•  Be clever

•  Think communities

•  Be environmental