The Australian economy is looking decidedly challenging with some economists even forecasting the country will enter a recession next year after dodging it for more than a quarter of a century. In that context, the investment outlook session aimed to focus on where the money is going – and why. Media reform, macro-economic impacts on investment flow and a shift in where and how ad dollars are spent were big hitting topics on the agenda.
Omnicom Group CEO, Leigh Terry, moderated a high level debate while Eric Choi, media and telco analyst at UBS, added the investor community perspective.
Jason Dooris, CEO of independent media agency Atomic 212, said there are signs marketers are preparing to “batten down the hatches” to protect against a tough economy over the next 18 months to two years.
“A lot of people are trying to get their house in order for what the economy is going to bring over the next two years, but we’re not seeing a downturn in spend, we’re seeing the opposite as clients try to prepare themselves,” he said.
“We’re seeing clients moving their investment from strong acquisition driving media to brand media to drive preference as they prepare for a tough economy where they don’t want to be judged purely on cost. It’s an indicator that we need to start battening down the hatches a little bit”.
Matt James, CEO of Publicis Media, began by saying he is “conservatively positive” about adspend trends in the next 12 months, but that there will be a considerable shift in the “composition” of that spend.
Choi outlined how the investor community uses the same metrics and measurements as the media industry does to predict the flow of money, turning to SMI, Nielsen, OzTam and GfK radio ratings to inform decisions, from which basis he explained the investor community’s negative perspective on the growth of publishers such as Fairfax and News Corp and the underwhelming valuations on print media.
Meanwhile, Megan Brownlow of PwC, disagreed that those measures reflected the true value of media and warned against “group think” that sees certain sectors “on the nose” despite “strong underlying assets”.
“Sometimes analysts will give them a bum rap and there’s herd mentality in the market – share prices are not always the best dictator of an asset’s value. We see some extraordinary psychological group think around how assets like media are valued,” she explained.
“The digital bubble was the best example of that when things got valued at the most extraordinary rates, but weren’t anything more than smoke and mirrors. It concerns me that perfectly good businesses that are doing a great job for their clients and readers have become on was the nose [speaking particularly in reference to print media].”
The role that paid media plays and the way metrics are reported was touched upon with Brownlow noting that IPG Mediabrands’ decision to pull out of SMI data was “a mistake”. What she believes the industry needs is more media owner groups banding together to aggregate direct and agency revenue so the industry can offer a more holistic view of where money is being invested, referring to the impact media attention and reporting of downward slides in agency investment in channels such as print can contribute to their decline.
Carat’s head of investment, Ashley Earnshaw, suggested that in doing so “some of the emotion and hyperbole” around channels’ performance will be removed, but Earnshaw and Dooris were in agreement that whether a channel was in overall decline or not had no bearing on whether it was selected for clients.
“Whether it’s dipping in single or double digits if someone is watching or reading, they are relevant and the cost is effective then we’ll talk to them,” Dooris said.
On media reform, James added that the discussion around consolidation, as a result of media reforms, should go beyond locking media together and towards investment “behind being able to understand the customer across those platforms”.
“Consolidation in itself won’t impact the flow of investment of media dollars, but it should bring greater collaboration and cross-media understanding of the customer,” he said.
Check out other highlight reels for the Media Summit here.
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop me a line at rosiebaker@yaffa.com.au
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