Tuesday, October 14, 2008

6 reasons why a economic downturn might be good for the AU digital media industry

1. Less cash floating around combined with more conservative spending should mean less new sites pop up that fail to offer anything new to either the audience or the ad market. I don’t think in this climate Fairfax would have invested in something like http://www.thevine.com.au

2. There will be increased pressure on sales teams to offer real value, insight and service to both agencies and clients; rather than being order takers. Right now, this doesn’t happen, and frankly it doesn’t need to given the growth the digital ad market has had to date ... yet I think in the next 18 months there will need to more focus given to how digital channels can both answer business objectives and work closer with ‘broadcast’ media in the sales pitch.

3. In addition there will be pressure on publishers generally to differentiate themselves to competitors in the market and compete for ad spend based on more than unique users. To date, there is very minimal research that proves that any of the major options offer a superior audience – and those who have developed their own research have generally missed the mark in terms of bringing it back to their own product. Newspapers, radio and TV all have lobby groups that generate research and insight to help the ad market understand their product. Digital has the IAB – which publicly hasn’t done anything to help the medium in more than 2 years. Now is the time the IAB needs to become active as its stakeholders (ie the large publishers) are going to need an industry lobby group to show value in the medium.

4. Enhanced focus on strengths. My personal feel is publishers will need to get rid of ‘nice to have’ elements of their sites. What this will probably mean is job losses, especially in production, but more importantly it should mean each publisher focuses more time and effort on the areas they are really good at, which should make them better. If you look at the big publishers – Fairfax, ninemsn, News, Yahoo – they are all excellent at 3-4 things, good at 4-5 and average at the rest. I think there will be closer attention paid to the average performers – page views, revenue, yield, costs etc – as now isn’t the time to be carrying excess weight.

5. The ‘measurability benefits’ stance of digital will be under greater scrutiny. Digital has and still does trade off a foundation of ‘measurability’. “Digital is more accountable than other media”, “Digital offers better ROI” … I think we need to look at this in a more honest fashion … and also look closer and quantify the relationship between online media and offline media. What will this mean? Less data probably, but better data … and data more aligned to business objectives. So – your campaign for an FMCG reached 4m people and generated 55,000 ppl through to the website … but what did it do to increase the unit sales of the client?

6. Untargeted ad networks will struggle. There is a reasonable business right now in buying cheap inventory off US or European remnant ad pools and selling it back to AU clients at a premium. This has to stop and will stop ... the US/Euro remnant networks will look to establish direct relationships with AU advertisers to generate growth, and advertisers will look to cut costs on these buys by wiping out the middleman. If your ad network doesn't offer either an elusive audience, sophisticated technology, or exclusivity I think your position in this market is under threat.

1 comment:

Wembley said...

gday

So yes digital publishers are simply terrible at customised solutions. Bad at creative responses.

They will get good at it. Well some will.

The established arrogance will dissipate among digital media.

This impacts agencies equally. The blind brief to all for the idea will get harder to get away with as advertisers demand more.

As for point six. The buy low and sell high chaps have had a good run but its not actually a model that is sustainable.

Oh and finally, pricing will keep going down. No matter how much they dont like it, it is coming down. What a silly little cottage industry it is where portals sell only 70% of inventory and simply make rates up, then cry foul when ad networks reveal true pricing.