Things We’ll Be Watching in 2012January 5, 2012
By Michael Solomon
SVP, Media Audit Operations
At MMI, we are – for the most part, at least — all “media geeks” at heart. We all share a genuine fascination with the media industry and the vendors, researchers, agencies and advertisers which comprise it. Here, then, are some of the top items which our senior media staff believes will be worth keeping an eye on this year:
Political Ramifications. It is estimated that some $3.2 to $4.0 billion will be spent on TV political advertising in 2012 between the presidential primaries and election and the various other national and local contests. These figures represent as much as a 30% increase over 2008. New legislation allowing for the formation of so-called super political action committees (super PACs) – which have no spending limits, plus what is expected to be a hotly contested presidential election, are driving this dramatic increase. This influx of demand will have far-reaching implications on non-political advertisers, even in what is otherwise a near stagnant media economy. The heaviest impact will be on local media outlets, as campaigns target key markets and regions. During political ad windows, local media outlets must offer political advertisers (although not super PACs) the lowest spot rate being offered, as well as the ability to preempt non-political advertisers. St. Louis, for example, on the border of Missouri and Illinois, will be in a lowest-spot-rate political window for one race or another for more than half of 2012. As a result, rates go up across the board, particularly in news or dayparts with proximity to news, and preemption rates also increase. Given inventory limitations and declines in local news ratings, political activity in non-news dayparts is also expected to increase. There is also question as to the impact of the political advertising environment on the effectiveness of those non-political ads which do find their way on air. The elections may also at least temporarily reshape the ratings for some of the programming itself, as viewers seek out (or in some cases avoid) political news and topical humor.
What does it mean? It will be more important than ever for advertisers to rely on their agencies for in-depth knowledge of the markets which they buy. Realistic market intelligence should inform planning, so that analyses of media mix, scheduling, pricing, daypart mix, and ratings estimates are as accurate as possible. Tradeoffs for cost premiums should be explored, and thresholds established. In order to reduce the risk of preemption, it is often necessary to pay rate premiums. Given an advertiser’s specific objectives, how important is a given week, daypart or program, and what premium is acceptable? What are policies for preemptions and make-goods during political windows, and what are contingency plans for heavy preemptions? Diligent stewardship and maintenance are also vital, so that agencies can make every effort to react in real time to preemptions, schedule changes, etc.
The Message is the Message. It’s been famously argued that the medium is the message. However, as technologies continue to explode, and consumers have increasing control over where, when and how they consume content, traditional notions of individual media (TV, radio, online, etc.) continue to become less and less relevant. In 2012, for the first time in history, the total number of US TV Households (as projected by Nielsen) will decrease … by 1.2 million households. A report by Credit Suisse also projects that subscriptions to Multichannel Video Program Distributors (i.e. cable, satellite, telecom pay video providers) will fall slightly in 2012. Experts believe this latter decrease is being driven by the economy. Still, some argue that younger consumers in particular increasingly expect to be able to select when, where and how to consume (and pay for, if applicable) specific video content of their choosing – whether that is on multichannel video, VOD, DVR, Hulu, Redbox, Netflix, iTunes, content provider “2nd screen” apps (such as HBO Go), etc. Some Multichannel Video Program Distributors have introduced lower-priced, more tailored programming packages to align their offerings more closely with this expectation. Further, research from Nielsen indicates that TV viewers are increasingly likely to be consuming other media simultaneously (roughly a third are social networking at the same time, for example, while significant numbers are also surfing the web, consuming print media, or instant messaging/texting on mobile phones). This cross-platform consumption peaks – not surprisingly – during prime time. Increasingly, both programmers and advertisers have pushed to exploit this multi-platform consumption to increase engagement with content and brands.
What does it mean? This shift has an enormous impact for advertisers. Opportunities for the delivery of a commercial message vary from one video delivery technology to the next, as do the demographics of the consumers of those technologies. Implications are far-reaching, with Nielsen noting an increase in “co-viewing” in the past several years, as families no longer have to watch different programs on separate sets. As more and more consumption shifts to digital media, multi-platform video buys have become increasingly common. Advertisers and agencies should plan for these initiatives on a strategic level, drawing on the appropriate experts and tools to help shape allocation decisions at the right time in the process. There is a push in the research industry for more accurate and universal measurement across technologies. Measurement is currently further along in certain technologies than others, and advertisers should continue to challenge media sellers and research providers for improved, holistic measurement in order to drive better accountability.
“What did the market do today?” Continued volatility in the general economy has translated to a similar condition for the media marketplace. Earlier this year, the National TV “Upfronts” (often considered a harbinger for the larger media economy) suggested a strong marketplace, as advertisers paid reported double-digit year-over-year CPM increases. Mere months later, however, reports indicate a softening in the “Scatter” market, beginning in 4Q11, with premiums falling off significantly. As of late 2011, most forecasters expected the US media economy to grow 3-4% in 2012, driven largely by so-called “quadrennial” effects such as the Summer Olympics and the elections. Many of these forecasts had been reduced from earlier in the year. Most currently see 2013 also growing in the 3-4% range, still leaving spending well below 2007-2008 peaks (to which it is not expected to return until 2015 or beyond).
What does it mean? Advertisers should expect thorough analysis and forecasting of costs from their agencies throughout what remains an uncertain economic period. To the extent possible, companies should allow themselves the flexibility to update plans and take advantage of opportunities as marketplace conditions change. Market-driven updates to goals should be transparently documented so that performance can be accurately assessed. Solid cancelation options and expansion clauses (as applicable) are critical to provide a hedge against economic volatility.
All the “New” That’s Fit. After years of circulation falloff, declining revenue, and mixed results in efforts to create profitable digital media extensions, the newspaper industry continues its attempt to reinvent itself in this age of new media. Ad revenue for 2011 is projected to be down by more than a third vs. 2008. On March 28, 2011, in a highly-scrutinized move, the New York Times introduced a “pay wall” (albeit a relatively porous one), which limits the number of articles a reader may view each month without becoming a paid subscriber. Paid digital subscribers have thus far exceeded expectations, with both traffic and ad revenue growing despite the pay wall. Experts acknowledge that it is still too early to make a final assessment. Other newspaper publishing companies such as McClatchy (Miami Herald, etc.) and Media General (The Tampa Tribune, etc.) are seeing digital revenues grow via local media site ad sales and online partnerships. Major publishers like Tribune (LA Times, etc.) and Gannett (The Arizona Republic, etc.) have also launched their own ad exchanges to control the minimum price at which unsold ad inventory can be purchased by third parties on their sites.
What does it mean? Advertisers should have a clear understanding of the composition of the circulation or audience they are purchasing in newspaper. Do circulation figures include digital readership? Will the online product be part of the buy? Are circulation projections or assumptions used for planning and efficiency analyses realistic, given recent trends for each paper under consideration?
Drama in Daytime. Historically one of the more stable TV dayparts, Daytime has undergone some significant changes in the last season or two, and is poised for more in 2012. Last year saw the cancelation by ABC of soaps All My Children and One Life to Live after decades-long runs, the departure of Regis Philbin from Live! after 28 seasons, and of course the exit of Oprah Winfrey and her syndicated Oprah (which albeit ran in Early Fringe in many markets). In 2012, expect new syndicated talk shows staring the likes of Katie Couric, Jeff Probst, Steve Harvey, and Ricki Lake (again). These are in addition to the still-relatively-new Anderson (Cooper), which debuted in 2011 and has been renewed. Despite these new offerings, forecasters still project significant declines in syndication revenue in 2012.
What does it mean? There’s the potential for ratings instability and for volatility from one market to the next, driven by variation in viewership, scheduling, and clearances. This will put pressure on agency buyers to estimate carefully, and to track and steward diligently. Further, Clients should have discussions with their agencies regarding the anticipated tone and content of new programs, to assure that it aligns with the advertiser’s requirements.
Social Acquaintance. There is no question that usage of social media has exhibited a meteoric rise in the last several years, as evidenced by the growth rates for membership, time spent, “likes”, “friends”, “product reviews”, etc. on sites like Facebook, YouTube, LinkedIn, and Groupon. The tremendous growth in mobile app usage for social media has further contributed to the importance of these sites to consumers. Most advertisers do not question the potential for social media to help them engage with their target consumers or build their brands. Rather, questions continue to center around specifically how to execute, how to set goals or expectations, what to measure … and how to measure it transparently. The complexity of constantly changing social media environments and of the relationship between social and traditional media (and the user) only magnifies these challenges. Research companies like Nielsen (BrandLift) and Brand.net (Social Attitude/SocialLink) provide some advertisers with insights into social media effectiveness and/or the impact of a brand’s larger digital campaign on its Facebook activity. However, analytics for social media sites are not comparable to other online advertising activity, and there is still limited transparency into the data from sites like Facebook. Interestingly, one area where the impact of social media is still in question is its impact on consumption of traditional media. There is no question that social media users “friend” traditional media properties and comment on their favorite TV shows, etc. A study by Nielsen last year indicated that (particularly for younger adults), an increase in social media “buzz” for a TV show translated into a measurable increase in ratings. However, a study by Knowledge Networks, also last year, indicated that social media was of limited importance in driving viewership of TV, and of comparable importance to any other “paid” media support (only 9% of social media users regularly use social networks to get information about TV shows, and only 12% regularly interact with TV shows on social media).
What does it mean? As advertisers and their agencies continue to formulate and test strategies for social media, emphasis should be placed on how best to measure success (informed by an understanding of available metrics, and the methodologies behind their creation). Importantly, a “like” with no subsequent continuing interaction between brand and consumer is of limited value, highlighting the need for clear objectives and a strong measurement plan. Advertisers and agencies should work with social media sites to achieve the same level of control and transparency in social online media as they enjoy in other online media.
