Industry View 2010

1. Industry View 2010 Everything you need to know about the media industry A work.report Date: February 2010

2. The roadmap • The process • Overview – the top 10 things you should know • Getting to know them • How they see you and the world • Getting it right with agencies • How best to communicate with them • Key recommendations

3. The process

4. Who we spoke to

5. OverviewThe 10 things you should know

6. 1.Increasing short-termism

7. 1. Increasing short-termism • Media planning and buying became more short term in 2009 and looks set to stay that way “we all know that late deals are out there” • Agency driven; looking for value, tactical over strategic, trading comes to the fore • Client driven; uncertainty over budgets and performance, risk averse “clients held onto budgets into well into the year to see what was going to happen” • This impacted upon channel planning ; • The main winner was digital as clients increasingly ‘got what digital was about’ • TV and Outdoor felt to perform well in the recession and offer great value • Cinema had much hyped success • Radio and Print the losers as ‘2nd place’ media fell by the wayside

8. 2. Accountability in pole position

9. 2. Accountability in pole position • Commercial pressures led to increased client demands for accountability • Econometric modelling on the increase ; although many increasingly feel uneasy about over reliance on black box tests • ROI modelling evident ; meaning those channels with clear and transparent measurement tools strengthened their position on the plan • Overall, the plan now needs to be proven, before it gets sign-off ; likely to stay this way from now on

10. 3. All work and no play

11. 3. All work and no play • All agency staff talked about increased work loads ; several contributing factors: • Freeze on graduate employment ; fewer junior staff picking up administrative tasks • Large scale redundancies at all levels ; little job security • Short-term month by month approach is harder ; accounts require constant attention • Constantly having to deliver added value “we were having to deliver a constant stream of proposals to prove we were active, even though you knew there was no chance of them getting signed off” • Exacerbated by fewer ‘rewards’ ; fewer kick backs, fewer parties, fewer grats

12. 4. Precarious business model

13. 4. Precarious business model • Several factors have led to increased business pressures: • Commission based income is down due to lower overall spends and cheaper deals • Kick backs and Fees are all down as agencies get squeezed at both ends (media owners and clients) • ‘Ridiculous’ deals were put in place to win what little new business there was • And / or to keep existing clients on board • Consequently, struggling to fulfil these • Digital is a bigger beast to service yet margins remain low • Search, affiliates, display, mobile, etc.

14. 5. Clients were more risk averse

15. 5. Clients are more risk averse • Overall, clients appear to have ‘stuck with what they know’ • Looking for ‘proven’ delivery of audiences • Consequently, TV remained on the plan but 2nd stream media lost out • Digital continued to rise as clients increasingly understand (and can account for) its contribution • Helped by its flexibility and low entry level costs

16. 6. Integration, integration, integration

17. 6. Integration, integration, integration • Continues to be the big ‘buzz word’ across the industry • Theoretically, there is still a debate about what it is and how to deliver it • Ask 10 different people and you get 10 different answers • In reality, clients are driving the agenda • they want to deliver one brief and manage a joined up approach through as few contacts as possible • The result is that agencies are battling it out amongst themselves for their slice of the budget • PR, DRM, Experiential, Digital, etc.

18. 7. Leaders and Followers

19. 7. Leaders and Followers • The recession has separated the ‘wheat from the chaff’ • There are 3 perceived leaders at the moment • MEC, Mediacom and OMD • The rest follow behind with little differentiation • And there are rumours of some key players being in trouble

20. 8. The future’s bright(er)

21. 8. The future’s bright(er) • Clearly, the last 18-24 months have seen a huge readjustment • Generally accepted that this is now the norm • Trading will still be tough but there is less uncertainty about what will happen • Consequently, coping mechanisms are in place • Agencies are leaner • Processes have been streamlined • Client servicing has increased focus • Now more positive about 2010, albeit less about an increase in business and more about simply being better prepared for whatever comes along

22. 9. A new way of thinking

23. 9. A new way of thinking • The traditional tools are viewed with increased scepticism • TGI, Econometrics • The behavioural sciences are now being delved into by the more future-facing planners • Behavioural economics gaining increased traction • More importantly, planners are increasingly bringing various data strands together to provide a more holistic view of their target - ‘data integration’ • Many are now getting to grips to social media, although there are still few examples of it working really effectively • Mobile is on the radar but it remains a tentative part of any discussion

24. 10. Changing agency models

25. 10. Changing agency models • A growing view emerges that media agencies will move in two opposing directions • Gravitate more towards media owners • A brokering house between client and media • Gravitate more towards clients • Building the bridge between consumer insight and media consumption • Tackling ‘bigger picture’ briefs • Iris, Kindred, Engine, COI – already operating in this area

26. Getting to know them

27. Agencies have become more integrated STRATEGY PLANNING Ideas advice Budgetary advice CREATIVE Sponsorship, beyond media INVESTMENT Broadcast, Press, Outdoor DIGITAL Display, search, SEO, Affiliates, Mobile

28. Agencies have become more integrated • Two years ago, agencies were in the throes of change • Planners were happy! • Incorporating digital skills and knowledge into their roles • Waving goodbye to ‘creativity’ • Bosses were unhappy! • How do you structure the new agency offering • Digital in – digital out – Superplanners ??? • Now we have a more consistent model – and a more integrated offering • Digital has become ‘another specialist unit’ • Superplanners understand digital media and cut up the total media pie, on and off line

30. Superplanners • Day to day planners now control all inter-media budget allocation • Intra-media budget allocation is left to the specialists • Outdoor, can be a fairly distanced implementation • TV has always been handed over for execution and contact with the TV buyer is critical to joined up planning and buying • Press, Radio, Cinema are watched more closely by the planners (they know more and have a closer idea of what they want and expect) • Online is very distant • So fragmented that they acknowledge their blind spots • Or ‘coded’ and lost in translation (esp Search)

32. Tools and systems • Agencies have gradually moved away from black boxes and systems as everyday planning tools • On the whole they are rolled out for pitches and special occasions • Why? • Digital planning created a new set of data and requirements that econometric databases couldn’t cope with (or which needed very costly updating) • Clients shifted mindset from ‘comms planning’ to on and off line planning and buying • So what is next? • The big ideas in communications such as Behavioural Economics are creating a new approach to insight (theoretical, academic, observational) • Decision making and customer journey research is easier to put at the heart of agency thinking (PHD and MESH, Starcom and SPRING)

33. Planners are magpies • They are info hungry • Using a wide range of sources • Storytelling approach, picking nuggets to build their case • A balance between rigorous strategic work and salesmanship • They use a wide variety of information sources • Media info • Consumer info • Case studies • Internal experts • All framed by their, easy to follow planning process

35. Online is a planning and buying business • Sources of info have widened to help justify plans: audience insight is increasingly desired to help find niche audiences • Have seen significant change; clients now ‘get’ digital • The fragmentation of sites does result in more selective screening • no time to consider everything therefore individuals have a personal top 10 that they always screen first • Portals dominate as they deliver large / wide audiences • Recency is everything – and gets you on plans!

37. Sponsorship is a ‘dark art’ • There is a ‘black market’ approach which dominates (and it’s TV biased) • It’s all about who you know ; a ‘nod and a wink’ about what’s coming up • People contact and good relationships will always supersede other sources of information • However, still require answers to some basic FAQs: • does sponsorship work/sell? • why spend on sponsorship rather than other parts of the media mix? • can you launch new products with sponsorship? Can you believe that there are still some key questions that we just haven’t got answers to – like does sponsorship work?!

38. Task based planning • Media planning has always been based on three questions: • Which media are most appropriate for • The audience • The brand / message • The task • An emerging theme is that planners start with an objective and begin their media thinking there • Ie. it’s a launch, that means TV at the heart with some digital support • And therefore some media generalities are emerging which replace the old ones TV for stature, Print for detail, Radio for frequency, Outdoor for reach, Cinema for environment

39. Task based planning LAUNCH TV Outdoor Online display Search REPOSITIONING TV Print Outdoor Sponsorship INFLUENCE Sponsorship Experiential Social BRAND BUILDING TV Sponsorship Outdoor Print Radio BRAND RESPONSE Online Radio TV Print SALES SUPPORT Online Print Radio Outdoor SALES

40. Insight team The typical client model Marketing Directors Brand / Marketing Managers Brand / Marketing Assistants

42. The life of the client • VERY time poor • Live life one project at a time • An unending series of meetings • Obsessed with their own sector – often refuse to see the wood for the trees • Agencies constantly having to deliver added value – being very heavily serviced • Typically in role for no more than 18 months – very short term focused

43. Media info: needs • What they’re looking for is: • Perspective on the latest media trends • Future gazing on what’s coming up • Fresh insight into their sector and consumer target • Competitive info – what have others done that was really effective

44. Media owners • Most clients aren’t being approached by media owners • Referred to media agencies when it does happen • Some marketers have had no experience of media owners at all • Those that had met media owners were often more senior and/or leading on high value projects • Specific partnership projects • High value sponsorship • Or a personal interest (looking for tickets to the World Cup!) But bear in mind, all media deals get referred to the media agency in the end

45. Key Learning • The way to a planner’s heart is with fresh insight into consumers and sectors • Fresh research given credibility through endorsement / partnerships • A new take on something beyond your traditional field of expertise • Dialogue with clients more likely with bigger (known) players but still expect mediation through the agency • Offer training seminars to junior marketers – “everything you need to know about...” • Get in front of senior marketers with fresh thinking (as above) on their sector rather than another sales pitch about your medium

46. How best to communicate with them

47. Communications • Agency staff have differing attitudes to communication from media owners; • Planners; see less of media owners (in general) and expect more from them • Reps that come to the meeting with something to share • Examples of cool stuff that’s been done • Insightful presentations bought to ‘agency mornings’ • Access to top people

48. Communications • Typically, clients will request info from the agency • They are receptive to getting ‘bespoke’ presentations / think pieces that can demonstrate something new and interesting • Most importantly, how it fits with their plan and how it can deliver ROI • Contact is (admittedly) difficult • Likely to push calls away – referral to media agency • Email is a better route in • Very senior, or junior staff are likely to be more receptive • Don’t forget the insight department also

49. Key recommendations

50. Recommendations • Go Junior • Tomorrow’s people (and they are easier to get to) • Research a sector • Every agency has a range of sectors and you can be the expert • Research with a partner • It softens the agenda and they can provide an ‘alternative source of authority’ • Recency is everything • Find a way to keep in touch with interesting snippets (work your website) • Cross pollenate • They all want to know about ‘the cool stuff’ you can do