The shape of things to come
From agency mergers to out-of-home consolidation, and TV challenges to social media punishments, everything in media and advertising stands on shifting sands, writes Bob Wootton
Change is everywhere.
In the advertiser-agency relationship space, with advertiser in-housing marketing services now acknowledged as a serious issue in Group M’s latest state of the market report.
In agency land too, often forced by the clients. The largest are not only leveraging bespoke combinations of services from holding groups, some are now demanding combinations across groups.
Like Renault, whose famously cost-cutting boss has been suspended for misleading shareholders as to his (stratospheric) remuneration, or P&G’s latest roster. How long before formations born out of pragmatism (or desperation) collapse under the weight of competitive jockeying, politicking and different P&Ls?
Lloyds Bank recently appointed Mediacom over stablemate Mindshare to its sizeable media account, overturning its bespoke “Greenhouse” arrangement with WPP group.
I understand why a group would want materially to improve its chances by having two shops in a four-horse race, but when there are only two from the same group? And does the advertiser really believe it’s got a better deal by pitching two siblings against each other? They don’t talk to each other, honestly...
In VMLY&R and Wunderman Thompson, two of the once-greatest agency brands have been subsumed into their ‘activation’ siblings. Truly are the mighty fallen and the geeks inheriting the Earth. Probably with some relish too, like when media took over the show.
Meanwhile, Karmarama and Accenture Interactive are getting closer and posting serious growth.
ISBA and the IPA have launched a joint initiative to contemplate advertiser/media agency relationships. One look at their memberships and entry criteria suggests it can’t work because the vested interests that drive them are simply too divergent. Watch it likely bump along with the odd holding announcement, peter out and get quietly forgotten.
Medialand has also seen considerable change. I only stepped down as Executive Director of global out of home body FEPE a few weeks ago, during which short time we’ve seen Global’s audacious play.
It’s now a close second in a market previously dominated by family-controlled JCDecaux but otherwise populated mainly by private equity-owned and venture capital-funded concerns.
The Outdoor Plus acquisition was complete but suppressed while Global acquired Primesight and then snatched Exterion from Ocean’s grasp at the last minute, allegedly eschewing due diligence as Ocean had already done it. Very ballsy.
8 Outdoor must be jumping with anticipation of a chunky bid every time the phone rings.
Consolidation in out of home is bringing the need for specialists back under scrutiny just as Talon secures preferred status with Havas group agencies.
ITV has just reminded us it can do mass reach with the first episode of this season’s I’m a Celebrity, but change in broadcasting too. An upbeat session at the Ivy Club saw four smart broadcaster folk from Discovery, Sky, BBC and Channel Four consider the future. No-one from a FAANG, though.
One drew an interesting distinction between entertainment companies – e.g. Sky, Netflix – and companies who use entertainment to sweeten other core activities - Amazon, Apple and BT.
Apple is now throwing money at content to keep people within its walled garden of devices and operating systems.
My household has finally succumbed to Amazon Prime. While we love the rapid ‘free’ delivery, we can’t see much in the telly offering.
Netflix is interesting, especially its recent appearance on the Sky homescreen.
Amazon Prime and Netflix appear ‘cheap’ and are doing big numbers, each at about £80 pa with five and ten million subscribers respectively.
Sky has an ARPU of about £50 from its 12m subscribers, albeit for much more. Its Q product draws plaudits though we’ve had protracted problems implementing it.
The average UK TV screen is now 55 inches - people who spend big on massive new screens aren’t shy about sourcing things to watch.
But contrast the BBC Licence fee, still only £150.50 for a whole lot of, er, ‘content’ and no pesky ads.
If I were a ‘terrestrial’ TV broadcaster offering so much more for less, I might see a ‘marketing opportunity’.
And Ofcom is encouraging UK broadcasters to collaborate in the creation of a British competitor to Netflix. About time and a complete volte face from the constipating stance regulators took on Project Kangaroo a decade ago.
(Astonishingly, seven thousand people still view TV in black and white. Do the lengths they have to go to justify the £100 annual saving?).
In data, surely the biggest play was Google’s quiet absorption of UK subsidiary and leading AI player DeepMind and with it the NHS’ data. Time to be very afraid?
Change in personnel too. Amidst a blizzard of mixed coverage, not least from the appointee himself, Facebook has employed ex-deputy UK Prime Minister Nick Clegg as Head of Global Affairs. A big hire with a chunky paycheck, though it beats paying tax, - expect much dampness as Clegg is tasked with mollifying their growing army of critics.
Facebook has also poached the capable Nick Baughan from WPP’s Essence after less than a year. Previously at MEC (now Wavemaker), WPP cast him - probably rather reluctantly – as their lead deflector of criticisms over transparency. He did good against the tide but I hope Facebook don’t typecast him similarly.
Change in gurus next, as a familiar US face is becoming known here. Gary (Vee) Vaynerchuk has gained notoriety, his shtick being that all advertising money spent anywhere except the Super Bowl, Facebook and Instagram is wasted.
Strong stuff. I have mixed views on this – both my wife and son have built very successful businesses on Instagram with no financial outlay whatsoever. But what about scale?
If you haven’t seen Professor Mark Ritson’s terrific rebuttal, it’s here. Could we get Vee onstage here with Thinkbox's Tess Alps and Lindsey Clay? I’d pay serious money for a ringside seat.
And finally, while DHSC and TfL continue to intervene and cramp advertising’s style without sufficient evidence, Government has at the same time finally woken up to how to bring the social giants to heel.
It’s telling advertisers to curtail their spends. Like that’s going to happen. Many have been suggesting this for years but advertisers have forged forward lemming-like. So good luck with that one.
Perhaps whichever Government we get will put their weight behind it once Brexit is done and dealt, not that that looks like happening any time soon either. Trebles all round.