2017 Media Review

2017 Media Wrap Up

It’s been a big year, with lots of changes. Businesses in media are feeling the squeeze, we are seeing more and more appetite for consolidation, and promises that our landscape will change drastically in 2018 and beyond.   Here are some of the key themes of 2017. 

Changes to media reform will open up the flood gates for mergers and acquisitions, creating Media super powers

On 16th October, 2017, The House of Representatives passed the amendments to the Federal government’s broadcast reform bill, which signals the last barrier to the reforms becoming law. This is going to mean a lot of consolidations across media owners in Australia, moves that have been speculated for a long time will finally be allowed to become reality.

The changes to the laws include:

  • The two out of three rule – which has in the past restricted an individual or company to own two or more out of TV, Newspaper and Radio in the same license area.
  • The 75% reach rule which has in the past prevented a single TV broadcaster from reaching more than 75% of the Australian population.
  • Removal of broadcast licensing fees which has been a barrier in the past to launching of new services.  Networks currently pay around $130m per year for their broadcast licenses, which is set to be replaced by a spectrum charge closer to $40m.  This is believed to be introduced to help lessen the loss of ad revenue due to other reforms, like gambling restrictions.
  • Restrictions to the gambling sector advertising, including no live sport before 8.30pm and for 5 minutes before and after the start of play.

Media owners in Australia say that these changes have been a long time coming.  They say the laws were archaic and meant that the industry had become hamstrung, failing to compete with the behemoths, Google and Facebook.  Communications Minister Mitch Fifield said its looming passage was a "shot in the arm to Australian media organisations and provides them with a chance".

In reality, they were putting pressure on government to change the rules to allow a raft of mergers and acquisitions.  And ultimately this means big impacts to the media market in Australia.  If we are not careful we will end up with a Coles/Woolworths oligopoly – only a couple of companies controlling most of the media in Australia.  This has multiple impacts – editorially, it means less diverse voices.  And importantly from an advertiser point of view, it means pressure on prices.  With less players in market, we have less opportunity to negotiate. 

For the moment, it’s watch and wait.  There will be at least one big move in each of TV and Out of Home, creating a super media owner in each channel.  We can only hope that a re-invigoration comes with the acquisitions, like investment in content, platform and sites. 

Digital is beginning to mature

There has never been a better time to be a digital marketer than in 2017. Although at times it has been challenging, it’s also never been more rewarding.

Here’s the top reasons that Digital Media owned 2017.

Accountability

For years we have been calling ourselves the ‘most accountable media channel’ and 2017 was the year we had to put our money where our mouth is.

Million dollar buzzwords for 2017; transparency, viewable, fragmentation, wall gardens, effectiveness, brand safety.     

2017 saw digital media not only take responsibility for its faults, but also take the appropriate steps to address them. Now there is no doubt that we are in fact, the ‘most accountable media channel.’

Automated Buying Maturity

A.K.A. programmatic trading.

No other discipline of digital media has been more scrutinized in 2017 than programmatic trading. Digital spend in FY17 hit over $7.6 billion which was a growth of 11% YOY. It’s been reported that almost 66% of this was done via programmatic trading.

Discussions will continue as to the effectiveness of programmatic trading as investment grows. From cost mark ups, technology advancements to how we can continue to find efficiencies in the supply-chain.

Can’t wait for the discussions once all media channels become traded programmatically.

Democratisation of Data

Once seen as a taboo topic amongst advertisers, 2017 saw marketers embrace the capabilities of data. It now underpins most digital conversations as how to drive efficiencies & has larger business implications for advertisers.

It no longer sits just with the I.T. department. Marketing teams, data and analysis, creative departments are all utilising it to embrace a true consumer centric approach.

G.A.F.A

The best saved until last.

Despite the plethora of digital news in 2017, it will still be remembered primarily as the year Amazon finally made it our shores.

You know it’s serious when they develop a new acronym for it. The ‘Digital Holy Trinity’ previously consisting of Facebook, Google and Apple is now G.A.F.A. – Google, Amazon, Facebook, and Apple.

Facebook and Google have both had terrible years in terms of accountability and now its Amazon’s time to shine and break up the ‘unbeatable’ duo.

Expect spend for both Facebook and Google to reduce significantly in the first 6 months of 2018.

Measurement is a very hot topic, and shows no signs of cooling down

If there is one topic of the year which has turned friends into enemies, it’s been the discussion about the effectiveness of digital measurement.

Rather than trawl through the endless questions posed by the industry, here are some of the key themes in measurement for the year.

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Digital measurement will continue to be debated and refined into 2018, but it’s not the only measurement focus.  All channels need to become more accountable.  What usually stops this is media owners not agreeing on changes to metrics, and not wanting to invest in making the sweeping changes that are needed.  Added to this, is that every channel has its own unique measurement, so cross channel understanding remains a pipe dream.  We have seen the Print channel abandon circulation metrics, and rely solely on Emma readership figures.  This is a great frustration for agencies, and makes real analysis almost impossible… a risky move in an industry that is honing in on measurement – and where most channels seek to get better at it, not worse.  Connected TV adds yet another layer of complexity when it comes to measuring ‘TV viewing’, as it’s impossible to track a single viewer across their many devices.

Overall, 2018 will see additional pressure on the numbers – more rigour by agencies and clients to make sure every dollar counts.

Is the appetite for digital content insatiable?

In the last few weeks of the 2017, we have seen some significant changes to the digital content ecosystem in Australia.  SnackableTV, Huffpost and Mashable are all scaling back operations in Australia for varying reasons.  Rumours are Buzzfeed are also considering their place in Australia.  Nuffnang, Adroll, Pandora and Sound Cloud are all reducing their presence.

Consumers are consuming digital content like never before, hundreds of memes, gifs, articles (or headlines) a day.  Our social media feeds are constantly pushing the newest, latest, most popular, most viral, most funny, most shocking bits of information, both globally and from Australia. Brands are struggling to cut through this noise, and importantly most brands are still struggling to crack into this market. 

Perhaps the scaling back of three big digital content businesses in Australia is a symptom of advertisers not having the knowledge, or the resource, to wholeheartedly jump in.  Australian audiences don’t have the scale to warrant round the clock content creation, by many players.  It’s unsustainable, but it’s also sad. 

To lose a uniquely Australian voice in the digital content space means audiences, and brands, are missing out. Unless advertisers re-engineer their marketing budgets to support a volume of content creation, over traditional assets, these digital content businesses will struggle in this market.

This could provide an opportunity for TV and Radio networks who are still required to provide a significant amount of locally produced content as per the updated media reforms to broaden their content distribution strategy to fill the gap in the market, however it would take a total reshaping of their business models.

A word on the way we watch TV

Connected TVs account for 35% of online video supply in 2017, 240% growth in the last year alone.  Whilst growth in inventory is very promising, there are still challenges with audience measurement, which makes adoption slower than it should be.  This is a good opportunity for early adopters to take advantage of low clutter. Expect inventory to continue to grow in 2018.

Inflation predictions for 2018

 

  • The total Australian market will experience moderate growth of between 2%-3%, driving the total market value to $16.4B
  • Due to the continued slow decline of TV audiences, all networks are investing heavily into new technology platforms to further improve yield and inventory optimisation.
  • Digital growth underpinned by fast-paced technology developments. Strongest growth will be in video with spend on mobile search and display predicted to double in the next couple of years.
  • Radio will continue to enjoy low digit growth as it is suffering from less disruption, and usually benefits from volatility in TV. Traditional networks have held ground versus streaming competition by investing in talent, content and social media.
  • Newspaper billings will continue to decline in 2017 as they cycle over the 2016 Census and Federal Election. Direct ad bookings will soften due to an easing property market.
  • Cinema's unique qualities of engagement and impact will continue to attract revenue.
  • Outdoor is technology-driven with substantial investment in digital and vendors buying new assets. This investment should pay off if buoyant forecasts are accurate. Focus will remain on location data combined with purchase, social media and viewing behaviour all offering a powerful opportunity for marketers.