August 22, 2008
A Red Letter Day. This week the VM Index showed a positive gain - the first time since May 08 - rising to 617.7 after hitting a bottom of 610.80 at the end of July. Despite the glimmer of hope, any portfolio following the index’s weightings would still be almost 40% below water seven months on. Resource stocks these ain’t.
Strong gains by the likes of PMP (+23%), TEN (+9.33%), Austereo (AEO) (+8.5%) and realestate.com.au (REA) (+8.8%), demonstrated that the short burst of optimisim wasn’t confined to one particular media type or category.
Stocks which experienced a less than glowing endorsement included Village Roadshow (VRL) -8.7%, WAN (-4.6%) and Fairfax (FXJ) -0.4%.
August 19, 2008
What the…?
Another day of hard-hitting, relevant news items courtesy of the once venerated Sydney Morning Herald.
Forget about brand extensions or leveraging the brand to optimise reach, this is arguably a case of how one brand now seeks to appeal to a majority of daily AB readers offline, while growing its online marketshare by cutting into the ‘jagged and shiny’ of tabloid reporting.
The strategy to broaden the brand’s online appeal by emphasising the sensational over the newsworthy is risky, but with News.com.au hiding The Daily Telegraph under a bushel and neutering its potential to dominate the Sydney online news scene, the SMH has more latitude to experiment with its news coverage. In other words, so what if a section of the audience is offended by “Contraversial Katy”, where else are you going to go for your dose of Sydney-centric business and sports news?
This is audience segmentation at its best, and worst.
The following headlines for Tuesday 19 August are not buried three or four links in, but are front-and-centre on page one. And with offline circulation figures being less than healthy, these news trinkets are certain to become more mainstream and less a titallating experiment in audience reach than they have been in the past.
This all begs the question - what’s the eventual impact on SMH’s premium CPM pricing and Fairfax’s impressive record of protecting its advertising yields? Time will tell, but doing ‘tabloid’ better than tabloid is not the optimum strategy for securing a premium on ad contracts over the longer term.
August 18, 2008
Universal Music’s recent product launch of a CD compilation containing user options such as additonal tracks, interviews and band profiles really crystalised the emotion felt by some consumers vehemently opposed to record labels because of their perceived recalcitrance in dealing with the commercial realities of a digital paradigm, and those who are increasingly challenging the ‘free’ mantra as a viable business model.
Universal has been stung with criticism that the label still persists with this walled garden approach to music marketing, effectively forcing consumers to pay for a cluster of tracks, with a supposed hook of user options. Others defend the label, insisting the ‘industry’ is getting it, allbeit by small increments.
MTV adds its two cents worth to the discussion with the release of its Music Matters annual research pack, profiling music usage in several Asian markets, including Australia.
The 2008 survey (5,700 15-34 year olds in the “urban middle class”) taps into markets as diverse as Vietnam, India, China, Indonesia, Singapore and Australia.
Not surprisingly, “whats hot” includes listening to music (53%) and social networks (37%); “whats not” includes spending $ on music and watching TV (46%). For an MTV-sponsored survey, that last one has got to hurt.
Despite the overwhelming enthusiasm for music (THE killer application), MTV sees the glass being half-empty. Illegal or ripped forms of music downloads now account for more than two-thirds of activity amongst the 15 to 34 age group (aggregated across the different markets), while in the specific case of Australia (”Oz”), 45% of survey respondents didn’t pay to download music in the previous month.
One of the more unpredictable stats in the research related to mobile activity, primarily music videos via the handset. In 2007, 13% of respondents used their mobile phone to access a music video (versus 27% via the computer and 78% for TV), 12 months later, mobile access reached 38%.
In terms of online reach for music videos, 32% chose YouTube, versus 16% for MTV, 10% for MySpace, 10% for [V] and 10% for iTunes.
The bottom line: consumers cannot get enough music content. Further, this rate of consumption is only set to accelerate as mobile and the building of personal libraries encourages even higher rates of music consumption, forcing the product’s life-cycle (i.e. utility of the music track itself) to become shorter and shorter.
Despite all the looney tunes and fruit loops which dominate the music industry’s personality scene, it would be a mistake to assume the industry is too stupid or too ignorant to learn and adapt to future market conditions - even if that involves adopting a free price point for some projects. The irony is the music industry, of all industry types, could be the first to develop a sustainable commercial model that works in a paradigm where scarcity does not play the ‘invisible hand’.
August 13, 2008
There is something very elegant about seeing the juxtaposition of a bad news story and a product promotion unintentionally triggered by key words in the story; the assumption being that every story carrying the key words will always have positive connotations, reflecting well on the promotion.
Enter the amazing, world changing iPhone. Zealots would have you believe the handset has, well…cred worthy of zealots. Others are more pragmatic in their attitude and consider the handset (no, its not a portal to the universe or a window to the soul) to be overpriced and now oversold on connectivity speed.
Well, that’s not the real story. The more interesting angle is how the market assumes iPhone will always be in the ‘good books’ with nothin to fear in a reputational sense, unlike Microsoft and its Vista/Yahoo debacles.
With that sort of assumption gaining ground, compounded by the cred of having something innovative to package around the iPhone, i.e. being first to market with an iPhone application, the scene is set for some diabolical encounters between product reviews and promotions, aided by another much hyped technology - ad targeting.
Cutting to the chase. Exhibit 1. is a story in the SMH about the issue of iPhone technology being incompatiable with 3G networks, both in Australia and worldwide. Telcos are putting the blame squarely in Apple’s court, and Apple in response, is deadly quiet. As an aside, if Apple doesn’t deal with this issue head-on, the likes of Nokia will eat their lunch when the next generation of handsets are released.
Exhibit 2. Thanks to the magic of word-association (without any consideration of the context in which these words are used) CommSec ads are splashed across the entire story - banners, boxes, the works. Ironically, this is when display advertising gets noticed really well.
CommSec seem to be very chaffed about their new iPhone trading application, and they wear the badge of ‘innovators’ all over their sleeves. Trouble is, the accompanying story goes to great length to point out the service outages currently being experienced by iPhone users; not the sort of thing you want to happen when you’re trading the last of your superannuation on a Chinese-hedged managed fund!
One question: shouldn’t the publisher or agency alert the advertiser of the issue, or even better, be proactive enough and pull the campaign’s word-association parameters when there’s a whiff of bad press? Just a suggestion.
August 10, 2008
Those of you who are more perceptive of systems change (others will refer to it as the Zeitgeist) will recognise the Internet’s morphing from a web of documents to a web of people, sweeping aside the traditional, but authoritative role of documentation for the emotive and subjective language of opinion and assumption. Remember, we’re all experts now!
In essence, this change is about electronic word-of-mouth (WOM) or consumer generated media (CGM) ripping holes in the delicate fabric of corporate positioning strategies. Reputations built more on spin and less on actual service and product quality are first in the firing line.
Given then how this ‘ripple effect’ is an obvious business risk, where’s the commercial will to employ analytics to quantify both the speed and direction of this consumer shock waves? Where’s the emphasis on sentiment as a precursor to consumer behaviour?
And that’s the key.
Sentiment analysis (and its poorer cousin, sentiment mining, which is done by the likes of BuzzMetrics, BlogPulse etc.) is the canary in the mine. If done well ( meaning comprehensive, robust samples, with more human interevention than software application), sentiment analysis identifies more than just frequency of expression; it determines market drivers and inhibitors to commercial and organisation growth. It’s as simple as that.
The Twitter example above, highlights a rudimentary form of sentiment analysis, this time focused on the commentary swirling around recent movie releases. A more ambitious analysis would seek to develop correlations or relationships between sales performance or brand equity and the quantums associated with positive/negative sentiment.
The difficulties of using automation to conduct this type of analysis are obvious. Much of the current debate dealing with sentiment analysis is focused on how software can reduce the number of false positives without compromising on the efficiencies of scanning/spidering billions of characters in a cost-effective manner.
The alternative is a hybrid solution involving people (i.e. analysts), with the obvious drawback on volumes and expense. Nevertheless, the rules of sample methodology are equally applicable here as they are elsewhere, suggesting conclusions with high confidence levels can be reached without necessary trawling every online comment or opinion piece.
The bottom line: which is more effective when it comes to semantic orientation classification - man or machine?
Fortunately, this isn’t a battle the machines are likely to win. Quiet simply, the value of sentiment analysis is only fully optimised when context is taken into account, alongside the sentiment of opinion/comments being scrapped. In other words, the value in determining an overwhelming negative or positive sentiment is only realised when we also have insights into the beliefs, personalities, community, influence and authority of the individuals making the actual comments.
And this can’t be condensed or modelled into an algorithm - no matter how hard Google tries.
August 10, 2008
Time Warner refuses to scotch rumours of an AOL sell-off, despite the worst than expected performance of the group’s online division. State-side, the AOL division is missing all financial targets, thanks in part to a strategy which sounded good at the time - dump subscription fees for advertising dollars. Perfectly reasonable in a bullish ad market!
Yet, despite the turbulence, AOL has invested millions in its Advertising.com ad network, aong with swallowing the Euro-centric social site, Bebo. Interestingly, AOL has re-launched its Australian presence, with an obvious interest in propelling Bebo to a critical mass locally.
The question for AOL, and its relatively late run in the Australian market is, can its social network, with an audience profile skewed towards a sub-16 age group, generate the necessary attention to garner advertising support, or is this simply a spoiling exercise to disrupt MySpace’s local efforts?
To be brutaly frank, all social networks are playing the spoiling game. None are generating sales-based returns for advertisers here in Australia, yet they still attract display ad dollars which would probably be better spent elsewhere online, hence their ability to disrupt or impede revenues of the more ‘traditional’ online media plays.
In the meantime, the combination of Bebo, MySpace and Facebook battle it out for two very different audiences - those aged below 18 years (Bebo, MySpace) and those above (Facebook). Yet, all have one thing in common - they all have audiences with a predisposition to ignore display advertising which impinge on their personal space.
Audience Composition (%): June 2008
From an audience perspective, Bebo is running a distant third in Australia, with a monthly active audience of between 600,000 and 700,000, compared to MySpace with more than 2m and Facebook with 3.2m (Source: Nielsen Online). Interestingly, anecdotal evidence suggests Bebo is regarded more highly than MySpace amongst the teen market for its ease of use and cleaner design. However, to this point, that hasn’t translated into a larger monthly audience, let alone one which carries a premium.
Here’s the point: AOL is in no position to afford Australia prime status in its Bebo network, hence it will increasingly find itself outgunned in the sales department relative to other local operations. AOL’s most recent incursion into Australia will probably be even shorter than its first.
August 1, 2008
On a month-by-month comparison, the number of online display campaigns in June 08 was approximately 86% higher than the corresponding period the year before - from 2,219 to more than 4,300 campaigns a month, or almost 11 new campaigns a day! (Source: Adrelevance)
Into this mix sits the automotive sector, of which one of the largest online display advertisers is Toyota Australia. Coincidentially (if you believe in coincidences), the number of automotive campaigns in June 08 was also up 86% on the same period a year before. However, it is the broader automotive sector which seems to be providing impetus to that growth - in particular auto publishers/classifieds groups, like Drive and CarsGuide.
This is to the detriment of manufacturers, which in June 08, made up 59% of all auto campaigns, compared with 61% from the year before.
Toyota, as a case in point, slips to 14% of all manufacturing campaigns, despite an increase in the real number of online display campaigns. This four point slip in share-of-voice amongst auto manufacturers is predominantly the result of exceedingly aggressive behaviour from brands below the top three, including Honda, Jeep, Subaru, VW and Mazda.
In the case of Honda, for example, there have been some spectatcular jumps in online campaign activity. In March, its online campaign index jumped more than 1500% relative to its performance in January 08, followed by a similar increase in June.
With auto groups increasingly committing significant advertising dollars to online, at the expense of above-the-line, there is added pressure on media planners to justify higher CPM charges and lower response rates associated with an increasingly saturated automotive media. Unfortunately for planners, auto groups are unlikely to reverse their media thinking given the increasing investments they are making in website-initiated CRM programs.
August 1, 2008
One month into the new financial year and the news ain’t no better.
In the last two weeks, the VM Index has slipped a further 0.7% to close at 610.82 - that’s almost 40% down since early January 08.
There’s a poetic irony in the fact that as incumbent media (both analogue and digital) churn through the weeks and months seeking to reinvent their positioning, if not their actual offering, smaller artistic operations like the Nine Inch Nails are blasting holes in traditional media economics with their free music offering and high margin events. Such is life.
But I digress. The slight percentage change in the index hides some signficant shifts, both up and down, amongst the listed stocks. At the extremes, MacquarieMedia (MMG) rose 11.3% while Village Roadshow (VRL) fell 15.2%. In between, West Australian Newspapers (WAN) rose 9.6% and Wotif (WFT) was up 11%, while Austereo(AEO) fell 8.4%, along with Prime (PRT) down 7.4% and Seven Network (SEV) down 8.6%.
The permanance of this downard trajectory in the VM Index simply highlights the point that the reversal in negative sentiment in the media sector will take more than just a rosey press release on quarterly earnings. What’s needed is fundamental structural change, starting with a realisation by boards in London, Sydney, LA and Shanghai that the economics of scarcity is dead.
The bottom line: if you digitise your assets, prepare your company for two major impacts: retail pricing based on a zero marginal cost, and secondly, for an onslaught of hacker innovation, where individuals with far more skill at product innovation than internal teams, now set the agenda.
If musicians (not their labels) can get it, why not the princes of print or queens of screen?
Sadly, the market is beginning to realise the monarchy is dead.
July 24, 2008
Putting aside practical issues such as fact checking and the legal necessities required to avoid contempt of court, the winds of change within the professional media circuit clearly flag that publishers and other outlets can no longer afford to sustain products which are produced exclusively by professional journalists, writers and film crews.
Instead, the mix is increasingly being diluted by social or community contributions. These ‘contributions’ are, more often than not, appearing as direct content pieces, but emerging is another type of contribution - that of personal data, including editorial preferences.
In effect, the media’s expertise in news gathering and analysis is now being de-constructed to follow several agendas at once, each serving key customer segments, rather than the one agenda which has previously been set by the outlet’s editorial team.
A very recent example of this trend is the association now developing between the New York Times and LinkedIn. Aggregated data on occupations, geographic spread and other details are being used by the paper to make its editorial coverage more relevant to readers, or in this case, members of LinkedIn.
There is nothing unusual in media outlets market researching their audience to determine profiles and story preferences, but linking part of its editorial coverage to a dynamic membership base like LinkedIn, where profile characteristics are changing every day, if not every hour, is a new proposition in audience engagement. And this time, the information is incredibly granular, as opposed to the handful of traditional psychographic segments so loved by market researchers.
A sudden surge in membership from a certain industry vertical, for example, (the above image highlights energy professionals) would flag a requirement to re-evaluate existing reporting around energy issues, and perhaps force the paper to re-focus its efforts in this area. Hypothetically, several such insights or changes could emerge during the day, placing considerable pressure on resource allocation to capitalise on new members and secure their loyalty by demonstrating an immediate insight into issues relevant to their profile through editorial coverage.
In dealing with an influx of new readers who are engaged in energy production, for example, the paper could produce a special feature on carbon trading systems around the world, canvassing a range of professional opinions (including some from LinkedIn members!).
In broader terms, this dynamic transfer of audience details (in aggregated form) provides the media outlet with two positive outcomes. Firstly, it secures a more engaged audience, improving retention and acquisition metrics. Secondly, advertisers now have fantastically improved methods of validating audiences, which in turn creates greater value for sponsors and brands.
But before any of this can happen, media of all persuasions must recognise that data strategies, particularly those around audience profiling, including the identification of behavioural characteristics and preferences, are needed to not only negate the risks and general loss of control associated with UGC, but to go some way towards repairing an arguably broken revenue model.
July 19, 2008
The increasing dominance of search as a media option is having a profound impact on its positioning as a marketing discipline.
Given that three out of every five Internet sessions involves the use of a search engine, and that consumer satisfaction with their initial search results is running at more than 90%, the days are numbered when search will be viewed only as discrete and perhaps quaint option for mainstream brand and retail advertising.
More accurately, search will play the roles of both a substitute and complement to other media, depending, of course, on the campaign and business objectives, and in particular, how people ’shop’ a particular category. For example, do they research online, then buy offline, or research online and buy online, or research offline and buy online. Still with me?
Further, this phenomenon known as the ‘digital disparity’, where digital marketing spend, as a proportion of total spend, is still below the proportion of time consumers devote to digital media as a proportion of their total media time, is rapidly closing thanks to the analytical methods employed by the search industry (i.e. engines as well as their clients) to determine ROI on a range of variables, including brand equity.
Let’s face it, publishers who rely on general online display advertising dropped the ball on this years ago and have never re-gained ground.
In short, not satisfied to simply take the largest slice of the market’s digital spend, search is making some very serious investments in new methods and analytical tools to prove one point: that search is the most cost-effective advertising medium their is, and by a significant quantum.
From the ‘hygiene’ practice of correlation and trend reports, through to cross-media and diminishing returns analysis, day-parting ratios and efficiency matrices, search is preparing to make a very forceful case that an advertiser can optimise a campaign, and not just a website or landing page.Even more importantly, the argument will not be limited to the currency of CPA, CPC and the like, but will also engage the almost unchartered territory of brand advertising as well. In other words, the value of optimising a website or purchasing a keyword should not be confined to immediate actions, but possibly to events which occur well after the actual search has been made.
When click-through rates for online display advertising began to drop through the floor, this “highly accountable” medium drafted the branding argument to support ongoing ad funding. Most advertisers viewed the tactic rather cynically, and as a result, have not boosted their online display budgets accordingly (as a proportion of total budgets). For this reason, it becomes perfectly clear that search will need to do the heavy lifting in persuading advertisers of the medium’s credentials as the preeminent media choice.
