It’s been a trying time for for media buyers and their clients, if the 2011 Q1-Q2 figures are anything to go by. Mike Leahy gives some suggestions on navigating the rapids. Will the picture have changed at all when the latest numbers are revealed?
At first glance, the total All Media Index of 2011 January to June compared to 2010 January to June shows that media owner delivery to advertisers is not doing too badly. Sure, rates increased by 8.7%, but performance is also up, by a good 6.0%. Thus, the Media Inflation Watch (MIW) Index, which is the index of value – the cost per thousand, if you like – is up a relatively acceptable 4.4%. This figure is lower than the past couple of years’ annual yields.
But this average hides the dynamics between the media categories which, upon further analysis, highlights the trying times. And for some media owners – and their advertiser clients – this is an alarming picture.
Television, particularly pay-TV, has shown some aggressive audience growth. Free-to-air’s rate increases were modest, which resulted in a substantial negative MIW Index. Pay-TV – to date DStv only – hiked its rates by a massive 27%, but due to the innovative marketing of new subscriber packages has increased audiences in line with the rates.
The result: little more than a standstill in MIW.
Low to negative MIW increases means that television is becoming relatively more competitive compared to competing media. Add this to the justifiably high rate increases of pay-TV – DStv – and it results in more and more money being sucked from competing media. Now put into this mix a TopTV that provides commercial access to its previously non-commercial audiences, and you have a rampant television sector.
RAMS data in the last few years indicated that the average listener was spending less and less time with the medium. Thus, although the last seven day numbers were still high, the numbers for the average quarter hour – and thus the performance of the average commercial spot – was falling. And this was placing severe pressure on the competitiveness of the medium.
Fast forward to 2011 and a different picture emerges: one in which the average listener is deciding that it is worth devoting time to radio. Thus, the number of listeners to the average spot is increasing, and this has led to a relatively competitive MIW Index – to the undoubted relief of radio sales folk and their bosses.
Much is being written about the pending demise of the big daily and weekend newspapers, and fingers point to steady circulation declines from one ABC period to the next. The circulation decrease affect on inflation is more immediate: even modest rate increases yield disproportionately high cost-per-thousand (CPM) circulation increases.
For example, in 2009, weighted daily newspaper circulations in Inflation Watch decreased by 5.3%, in 2010 they went down by 5.6% and in 2011, they will drop by 7.7%, if the rest of the year’s trends are the same as the first six months. Cumulatively, that means a loss of 17% in three years. But asking rates went up by a cumulative 26%. The two combined yield a CPM circulation increase of a staggering 59% by the end of the three years. A similar, but not quite as dramatic, pattern is observed for weekend newspapers (51% CPM circulation) and, to a somewhat lesser extent, consumer magazines (43% CPM circulation) and business-to-business publications (35% CPM circulation).
Magazines and business-to-business publications are really crowded categories. A major contributing factor to the decreasing average circulation is the fragmentation and cannibalisation from an increasing number of titles: consumer mags number 600+ titles in 2011, from 250 in 1991. Of course, more focused editorial content and circulations can mean better media environments for advertising, and so better advertising. But it also means higher cost per contact for advertisers with mass targets.
Community newspapers buck the trend of their cousins. This is because they have consistently delivered more conservative rate increases, along with maintained or increased circulations – the latter because the most important ones are urban free distribution and they control their own circulations.
Out of Home (OOH)
This, the oldest medium, is surprisingly innovative and entrepreneurial. New formats, lavish and creative erections and specials rule the top end! However, much of that spirit does not apply to the run-of-the-mill areas. Throw in the need to diversify away from the over-reliance on alcohol advertising and you have an uncertain medium- to long-term outlook. Continued low to modest rate increases reflect this situation.
This medium is largely driven by the offerings of Hollywood and Bollywood. Good movies bring in audiences and raise the performance of and sentiment to the medium. The nine months to June 2011 reveal this. In October to March, movie-goers stayed away, giving the average movie house its lowest-ever audience. Internationally, cinema was in the doldrums. In the April to June quarter, more attractive movies brought back audiences to much the same level as prior to the previous six months. But the medium’s bad patch shows in the figures below.
Long-term audience per average movie house is moving downward under pressure from competing entertainment media (pay-TV) and ticket prices.
This is a rapidly growing medium, but growing from a very low base. Many important sites continue to have a great deal of availability, so they have the capacity to grow volume and revenue without increasing rates, and have done so.
Navigating the media rapids
A medium offers deals to attract advertising buyers. Combinations of money-off and added value can make a medium look attractive. More budget and longer commitment gives even more money-off and added value. There is nothing new here.
If you want to analyse what your money will give you, you’ll be given the latest performance certificate or viewership/listenership/readership data to study. “We have so many listeners or readers and here is the proof,” will be your medium’s response. Again, there is nothing new here. However, the problem is that the proof is historical, and it is being analysed in the present for some future event.
But if a medium’s performance is all over the place, the real delivery can be a gamble only exposed when – or if – a post-campaign performance analysis is conducted. Red faces all round and profuse apologies, but you took the chance so tough luck! “We provided no guarantee, just an indication.”
So how can you negate the gamble in the rapidly changing, uncertain media world? Well, some media are much less of a performance gamble.
Most online media is sold on an upfront CPM rate: so many thousands at so much CPM.
It delivers a large measure of certainty and is an attractive feature of the medium. TV performance can be bought this way too, although spot buys in specific programmes are still more common.
But most print and radio buys remain performance gambles.
In the print market, this is not a new concept. Many years ago, in a media recession long forgotten, the Readers’ Digest provided a guarantee of its circulation and did, in fact, rebate a very modest amount of money when it just missed its target. Perhaps it is a concept that needs revisiting. It will take brave media owners, but in uncertain times bravery should be rewarded big time.
This story was first published in The Media magazine.