As 2017 winds down, we take a look at this year’s industry events of note.
1. Trust Issues
In terms of broad trends, we have seen an increased focus on the issues of transparency and trust for what is emerging as the largest channel, digital. From an AMAA perspective, over the last year we have seen some members announce they are focusing on multi-channel audience measurement and will no longer provide an audited circulation metric as an additional layer of transparency, at the same time we have seen the issues of the opaque digital supply chain begin to take centre stage for industry debate.
Globally, the world took note in January when Marc Pritchard, Procter & Gamble’s (P&G) Chief Brand Officer stated that “the time for action is now for all of us to step up and elevate the media supply transparency so we can drive a clean and productive supply chain”. He demanded that all P&G media trading partners seek industry certification through the Trustworthy Accountability Group (TAG) and announced that P&G would no longer do business with those that did not do so. As Chair of the ANA he also urged other marketers to do the same A bold move that shows the level of accountability the large marketers are now demanding in the USA.
In terms of the larger industry and the AMAA’s accountability spotlight, we have continued providing a barometer of where within media trading the trust issues lie. We all know the answer - digital and primarily in programmatic trading.
In May, the AMAA released its second industry trust monitor research – The Trust Equation – highlighting industry sentiment on the key issues in our market and on solutions such as those delivered by industry bodies overseas TAG (USA) and JICWEBS (UK).
We also worked closely with the MFA, IAB and also the AANA on how this market can step forward to address the issues and based on global best practice what a solution for this market would look like. This culminated in these bodies announcing a working group to review best practice with regard to brand safety and digital transparency.
The AMAA has proposed that we provide a validation programme, to the industry agreed standard, based on global best practice to elevate trust within the digital trading ecosystem that standards and best practices are adhered to. We look forward to continuing this work to assist the industry tackle these issues and supporting the industry in 2018.
We have also seen how digital ad fraud issues are escalating globally, with the Botmeth fraud and more recently the HyphBot fraud incidences that we detail more later in this newsletter. We also know Australian publishers were not immune from being affected by this issue and we predict that 2018 will be the year that digital ad fraud takes precedence as the big issue for our market.
The full Trust Equation report available to download here.
3. Industry bodies stepping up
It was also a busy year for industry organisations and the research they provide to the industry.
In July, the IAB Australia and Nielsen launched daily digital content ratings giving publishers, agencies and brands daily digital audience data across video, audio and text for the first time.
In August, former Unilever Chief Marketing Officer John Broome was appointed CEO of Australia's peak advertising body the Australian Association of National Advertisers (AANA) and at his RESET conference he indicated his priorities and that “ The environment is shifting from where people by and large trusted self-regulation to one where nobody trusts anyone unless compliance is proven”.
Rethink TV engaged the industry with presentation from Bob Hoffman, the advertising commentator famous for his blog The Ad Contrarian, where he that talked about the global digital market, the Methbot fraud and the growing issue of digital traffic being non-human, whilst Karen Nelson-Field presented research that confirmed the impact of TV plus highlighted that the Media Ratings Council, USA (MRC) digital ad viewability standard needed a rethink to measure for clutter with regard to the effectiveness of digital advertising.
4. Duopoly and the pressure on the Australian Market
In Australia, internet ad spend will capture 52.1 per cent of the market in 2017, ahead of the global average, according to Zenith’s Advertising Expenditure Forecasts. They also indicate that between them, Google and Facebook accounted for 76 per cent of internet ad spend outside China in 2016.
Zenith’s report found the internet is driving the great majority of global growth in advertising, and will account for 94 per cent of the growth in ad spend between 2017 and 2020.
Most of this will be captured by just five big platforms – Google and Facebook, plus the Chinese platforms Baidu, Alibaba and Tencent.
Between them, these five platforms increased their share of global internet ad spend from 61 per cent to 72 per cent between 2014 and 2016, and captured 83 per cent of the growth in internet ad spend over that time.
Whilst there are no accurate figures for the proportion of Australia’s digital ad spend that is captured by Google and Facebook, what is evident is that they are taking the lion’s share with at least two thirds of digital spend growth being by the duopoly. Effectively this means that for everyone else, the digital ad pie is actually shrinking.
However, metrics issues are forcing the walled gardens of these global platforms to open up to third party measurement. Facebook was forced to admit in 2016 that it had grossly overestimated video views based on people watching for as little as three seconds of a stream, February 2017 saw these issues continue into the new year. Facebook video streaming numbers plummeted 94% after Nielsen reviewed the way it measured the platform’s streams.
In the US, the social network agreed to open itself to third-party auditing by the MRC. A fortnight later, Google was also agreeing to audit YouTube as well as ad-buying platforms DoubleClick Manager and AdWords.
In March, Sean Hargrave, MediaPost's London editor announced it was Google’s worst week ever following the withdrawal of major brands from YouTube following brand safety concerns. M&S, Vodafone, Sky, HSBC, Lloyds and Royal Bank of Scotland, as well as agency Havas, joined the boycott while WPP and Publicis were forced to reach out to clients to see if they wished to follow suit. The British government also put its YouTube spend on hold pending a report on what the company planned to do to stop taxpayer-funded campaigns appearing beside extremist videos. In the wake of this Google’s parent company Alphabet was working around the clock to implement an artificial intelligence based solution to a problem which was estimated to cost the company $US750 million ($985 million).
Then the reality of the danger of fake news as a political tool surfaced with Facebook forced to acknowledge that its platform had been exploited by governments seeking to manipulate public opinion during the presidential elections in the US and France. And later in the year, it would be revealed that Russian-backed Facebook posts reached 126 million Americans during the US election leaving many questioning whether Facebook was complicit in the act. Facebook believes 120 fake Russian-backed pages created 80,000 posts and by November, the platform was gearing up to show users whether they had interacted with any of these pages or posts.
The only highlight for the Australian publishers in the battle against the duopoly has been that the review of the media ownership laws exposed the dominance of the global platforms and the risk to the sustainability of media businesses and journalism in this country. This resulted in the government charging The Australian Consumer and Competition Commission (ACCC) to investigate whether the online giants Facebook and Alphabet Inc's Google have unduly disrupted Australia's news media market by vacuuming up digital advertising revenue while benefiting from the content created by traditional media, such as newspapers. The review will examine the impact of information asymmetry, market power and the impact on consumers and the media and advertising markets. This will take at least a year, and whilst welcomed, is viewed as long overdue and even possibly too late to make the needed impact.
Meanwhile News Corp has been in discussions with Google during the year about the future of content and their relationship with premium content providers that resulted in the September 12 announcement by Robert Thompson, News Corp CEO at the Goldman Sachs Communacopia Conference of the end of Google’s First Click Free programme. You can read more about it on The Australian article published October 2 2017.
Not to be outdone, the AFR reported on December 12 that Fairfax Media and Google announced a new arrangement where Google will support Fairfax Media to sell and market programmatic advertising across The Australian Financial Review, The Sydney Morning Herald, The Age, Canberra Times, WAToday, Brisbane Times and the publisher's lifestyle offerings. The two companies will also work together to drive subscriptions and optimise customer experience on the publisher’s websites and applications.
5. Digital Ad Fraud – The Topic Du Jour
The entire digital trading ecosystem came into the spotlight in 2017. The estimates are that it will the industry cost between $7bn and $16.4bn this year. Our industry here is also finally is beginning to acknowledge that it’s a growing global issue that Australia also needs to get moving on. Predictions are that it could reach $50bn by 2025 to become the second most profitable area of crime after drugs.
In August, the World Federation of Advertisers revealed 35 companies representing more than $US30bn in global spending either had already or were set to change their media governance practices in light of questions over ad fraud, transparency and measurability.
October saw the discovery of counterfeit, or “spoofed,” ad space being offered as Financial Times inventory which led the publisher to question whether ad tech providers are powerless in the face of ad fraud.
The year rounded out when in November, Danish ad tech company Adform uncovered the world's largest ad fraud racket which is believed to have affected almost all of Australia's premium publishers. Called HyphBot, the domain spoofing scandal was said to be three to four times larger than the Methbot network discovered by WhiteOps in 2016 generating up to 1.5 billion requests per day creating fake traffic on more than 34,000 different domains and millions of URLs.
This affected Australian publishers and the market has moved to adopt IAB initiatives such as ads.txt to identify legitimate inventory to assist in fighting this issue.
6. The rise of consultancies
Advertising, agencies continued to grapple with new competitors as one of the more talked about trends of 2016 started to take very real shape: consulting firms staking a claim for adland territory.
In May, Accenture purchased adland darlings The Monkeys. In August it was The Works which was picked up by digital consulting business RXP while Adam Ferrier’s Thinkerbell caught the attention of PwC.
Broadly, there was a major talent drain as one big name after another jumped ship from agency to consultancy. Russel Howcroft joined PwC as chief creative officer with a raft of ex-adlanders including OMD’s Ben Shepherd and Facebook’s former MD Stephen Scheeler also making the move. In September, Deloitte cleaned out McCann Melbourne poaching managing director Adrian Mills, ECD Matt Lawson, head of strategy and media David Phillips and director of digital media Justine Mills.
While agencies suffer from client trust woes and marketers call for transparency, margins are an ever increasing issue for the traditional agency business model. 2017 has been a big year in the battle of the consultancies versus adland and we haven’t heard the last of this competition.
7. Publisher’s – a year of great change
From the publisher standpoint, it was a year of great change.
Fairfax had a tumultuous year with ownership of the company up for grabs most of the first half however in July 2017, TPG abandoned its bid making way for rival Hellman & Friedman to make overtures but it wasn’t meant to be for them either.
At the start of the year, Fairfax confirmed plans to separate the Domain Group into a new Fairfax-controlled Australian Securities Exchange-listed entity. Its first day on the Australian stock market in November saw the new stand-alone company trading at $3.90 a share, valuing the venture above $2 billion.
Chris Janz was appointed managing director of Fairfax’s Australian metro publishing division, responsible for The Sydney Morning Herald, The Age and The Australian Financial Review. He moved across from the Australian Huffington Post which he joined after being the founding CEO of Allure Media. In November, the Fairfax Media and HuffPost joint venture was called into question with a series of redundancies expected. A week earlier, the HuffPost’s joint venture with The Times of India ended.
Over at News Corp, Damian Eales took control of the company’s print operations while Nicole Sheffield moved to oversee digital as well as the company’s magazine arm.
To coincide with International Women’s Day, News Corp launched the With Her In Mind Network (whimn.com.au). Bringing together existing platforms including news.com.au, kidspot.com.au, taste.com.au and vogue.com.au, the combined network boasts a unique audience of 7.4 million.
The Australian took out the top prize for the second consecutive year at the Pacific Area Newspaper Publishers Association (PANPA) Newspaper of the Year Awards with the title winning in the national/metropolitan category of daily newspaper of the year along with best weekend category. Fairfax’s Australian Financial Review collected the award for national/metropolitan website of the year.
Whilst News Corp acquired the APN regional and community press titles whilst the remaining APN News and Media business, rebranded to HT&E – Here, There & Everywhere.
The traditional magazine groups continued to struggle with downward pressure on print revenue and their digital offerings battling the Goo-book duopoly. Bauer saw Nick Chan exit the role of CEO mid-year in favour of Paul Dykzeul from Bauer New Zealand but the biggest piece of news for the magazine publisher was losing the Rebel Wilson’s defamation case to the tune of $4.5M. This is now back in the court of appeal.
Rumours abound about further mergers of magazine publishers, so we wait to see how that plays out.
On a final note, very few media execs failed to read about the woes of Tim Worner Channel 7’s indefatigable CEO whose legal tussle with his scorned lover played out in the press keeping us primed on the PR challenge of the year.
It was indeed a colourful ride. It would seem the only constant is change.
As we turn our attention to 2018, given the past 12 months, that’s the only trend we can say with any certainty will continue so we look forward to an equally exciting year in 2018!
Date: 20 Dec 2017