MEDIACOM Marketing Digest 20 October 2004

MEDIACOM Marketing Digest 20 October 2004

20 October 2004

The New, Public TV3 Last week, we told you about TV3's new shows. This week, it's all about money - specifically, the dollars that TV3 will charge you in 2005 to promote your products.

TV3 have now released their ratecard for Quarter One 2005, and let's get our biggest gripe off our collective chests right now: kids' time is being increased by a rapacious 50% in February and March.

Let's put that all in caps for the browsers: KIDS' TIME UP FIFTY PERCENT! Last time we looked, kids hadn't suddenly become 50 percent more valuable, bless their little cotton socks. We all know that the little blighters bleed us dry, but we're speaking as parents, not marketers.

Could it be that TV3 are planning to deliver fifty percent more eyeballs to their children's' programming? Not sure how they're going to do that, given that they're also starting their commercial kids' time at 3pm next year, even though the youngsters will be just leaving school at that point. School buses fitted with TVs, perhaps?

OK, kids' time is a big deal only for a few advertisers, but the rate hikes don't stop there. Other highlights of the new TV3 ratecard: the "alcohol" zone, 8.30pm till midnight, up a mere 12% in January, 18.5% in February and 20.7% in March. Overall the increase for peaktime is 5.2% January, and 5.7% in February and March, which implies rate declines in the 6-8.30pm timeslot to offset the effects of alcohol. After these inflationary tactics, we'll need some alcohol ourselves.

This whole ratecard release is a change of approach for TV3, which has previously been content for TVNZ to take the flak for rampant rate rises. Is this a side-effect of the public float, where the demands of the market require more aggressive pricing to maintain and increase profits? Or do CanWest truly believe that the double digit media inflation of 2003 and early 2004 can be sustained into 2005, key indicators to the contrary?

The sad fact is that unjustifiable media rate increases are a global phenomenon, and unlikely to go away any time soon. But around the world major marketers such as Procter & Gamble have been voting with their budgets, and have publicly announced that they intend to actively pursue alternatives to television advertising, in response to this relentless combination of declining audiences and inflationary pricing practices.

When mass advertising was cheap, it didn't matter much that it was so blunt an instrument. However, it makes less and less economic sense to send an advertising message to the many in hopes of persuading the few, especially as alternative media enable advertisers to micromarket to key targets efficiently and effectively. The US networks have become heavily dependent on just four industries: cars, pharmaceuticals, telecommunications, and movies. It's no longer a question of if but of when we will go the same way.

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Back In Black For 2005 One more year of the SANZAR rugby contract to go, and both TV3 and Sky are now flogging their respective packages for free-to-air and pay coverage of the Super 12 final series.

2004 was a disappointing year for Super 12 ratings, with the lacklustre performance of the New Zealand teams in the first part of the series a key factor. Perhaps those half-time team talks by the coach might be enhanced by the presence of Sky & TV3 representatives, exhorting the boys to go back out and "win one for the ratings"?

TV3 Super 12 Airtime Packs range in cost from $28,275 up to $98,888, with ratings guaranteed against one agreed demographics, and are on sale now, on the usual first-come, first-served basis.

Sky also have their Super 12 Packs available now, with prices ranging from $50K to $175K - less a 5% Early Bird Booking Discount if you sign up before the end of November.

Apart from the Super 12, Sky are also selling an International Package of rugby, including the TriNations plus all 11 games in the British & Irish Lions 2005 Tour of New Zealand. Your contribution to this coverage, just $180,000 for the full scrum.

Why advertise in the rugby (paying a premium for the privilege)? Apart from the reality that rugby is the NZ male's national obsession, rugby is often one of the few places where we can advertise on television to some of the hard-to-reach male demographics (especially the rural community).

And, as a 2002 survey by Nielsen Media Research revealed, those key games gather an audience beyond the core Sky subscriber base. Only 64% of those who watched the surveyed match (the second Bledisloe Cup round in 2002) did so in their own homes:

* 19% watched at a friend's house * 13% watched at a pub or hotel * 3% watched at a club (social or sports) * 1% watched elsewhere

There is still the inherent problem with advertising in association with rugby or other sporting events:

* Where will your ad be placed? There are essentially only three positions where your ad has a chance of reaching the optimum audience for the event: last in break before the game, first in break at half-time and last in break before the start of the second half. Anywhere else and the crowd in front of this shared event will be in full armchair expert mode, ignoring any other messages tossed in their direction.

As we move towards a world populated by Personal Video Recorders - recent press reports suggest that Sky will have 25,000 units on offer by the end of next year - live sports will play more and more importance in TV advertisers' efforts to reach meaningful audiences. You would be well advised to start planning how best to take advantage of such events, sooner rather than later.

Maxed Out Our initial reaction to the first issue of Auckland Max: where's the content? It felt like we were reading the first few product-specific pages of a teen mag, the bit before the features - only there weren't any features to follow.

Not at all what we expected - we're disappointed.

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Saving Trees There's a reader lurking in the greater Washington region who's haunting news executives at the Washington Post. He's a youngish man, a recent law-school graduate.

When presented with a copy of the Post during a focus group, this fellow fumbled with it, according to the Post. He professed that he didn't know how it was organized.

How could this well-educated man be so clueless about his local newspaper? He's not. He reads the Post constantly on its Web site, WashingtonPost.com "sometimes for a few minutes, sometimes for hours". He just doesn't read the paper version.

In markets large and small, newspapers are trying to reach out to new, young readers, only to watch them walk away. Many focus groupers, in fact, said they wouldn't even accept the hard-copy version for free. The explanation offered, in many cases, was that they didn't want a bunch of newsprint "piling up" around the house.

Via focus groups, the Washington Post has learnt that nonsubscribers haven't lost touch with their journalism. On the contrary, these folks are ferocious, regular readers. It's just that they don't want to touch the paper or pay for it. And the company offers a perfect free platform - its Web site. "The good news is they're extremely familiar with the paper. The bad news is that they don't want to buy it. News is like air, and we've taught them that," said a Post source.

Is this bad? Many newspaper publishers think so, but perhaps that's only because they haven't yet developed a viable model for making the right levels of money off their websites. The Wall Street Journal is the only newspaper of note that's managing to extract subscription revenues for its web content. But many papers are requiring registration to access stories, and some are successfully selling archive access, if only to a few. And, of course, most newspapers manage to sell at least some advertising space on their websites.

What else works online for content providers? Some business magazines allow full, free access to their archives, but restrict current issues to their subscribers. Others operate a controlled release programme, doling out snippets of content on a preplanned schedule - and, not incidentally, enticing non-subscribers to dash to the newsstands to sample hot content that won't be available online for a defined period. It's website as marketing tool, not merely distribution channel.

There is no magic answer for the new paradigm. But in an online world where newspapers are competing head to head with every other news organisation for that elusive reader, no-one will ever be able to charge for access to general news. The most successful content revenue models are based on access to exclusive, proprietary content. Publishers who can finetune their offerings and develop a unique voice are halfway there.

Email Rocks The battle for the hearts and minds of consumers rages on. A UK study has found that email is challenging television's position as the dominant marketing species.

Research conducted by IPT in August and September 2004 indicates that consumers are showing a more favourable opinion of email marketing compared to TV advertising. When asked to pick the most effective marketing communication channel, 32% of consumers say e-mail, not far behind the 39% that choose television. With the majority of respondents choosing to receive their messages at home in the evening, the report claims, "e-mail is fast encroaching on TV's territory as the king of promotion". We think that's quite a leap of faith, but who are we to argue with the researchers?

The study also quizzed consumers to find out what makes them most likely to respond to email messages. Bribery (via discounts or money-off offers) was the most popular way to respondents' hearts, with "a general interest in the product" definitely in second place. "A prize draw" and "brand familiarity" shared the honours jointly in third.

Is email marketing one of the tools being actively considered to offset the decline of television? In the UK, the answer appears to be a resounding yes. 92% of industry professionals currently include email in their marketing budgets, and 51% of them intend to increase their spending next year.

Marketers still use e-mail marketing predominantly for customer retention. however, and its potential for up selling, customer acquisition and brand awareness is probably being under utilized. Just 41% of marketers measure open and click-through rates to gauge the effectiveness of their campaigns.

That's not surprising. Apart from the proponents of DM, most marketers have been raised in a climate of non-accountability of media. Even though peoplemeters track TV audience levels on a minute-by-minute basis, only quarter-hour averages are published. Radio ratings are derived from six-week surveys conducted once or twice a year (and blatantly manipulated by prize-wielding DJs). Newspaper and magazine readership figures are based on spurious "seen or looked at" statistics grudgingly compiled into annual reports.

Twenty years ago, at the dawn of the personal computer era, we would have been forgiven for thinking that by the twenty-first century we would have at our fingertips realtime data on audiences and readers. On the other hand, we also thought we'd have flying cars and commercial shuttle flights to the moon. Alas, the future ain't what it used to be.

Product Placement In Action Product placement on US TV shows has moved brands from appearing as mere props to becoming stars of the story lines, according to a report in USA Today.

Last week's episode of What I Like About You had two characters competing for acting work in a new Herbal Essences ad. The actual ad then aired for the first time in a commercial break shortly after that scene.

Other blatant placements in the new US TV season:

* Ford's new Mustang will be part of the plot in the second season of The O.C. * Hasbro will flag new features of its classic board game Operation when characters on Scrubs play the game in this week's episode. * Heineken shows up on Discovery's American Casino reality show. * Lee Jeans had a role last Wednesday in a photo shoot on America's Next Top Model. It is leveraging the appearance by making the shoot the basis for a print ad in this week's People magazine. * And as you'll have already seen, The Apprentice is positively besotted with marketers such as Levi's, Mattel, QVC and Crest.

The new thinking has brought shifts in ad dollars. For example, ever since it found success with placement in American Idol and 24, Ford has moved spending to such appearances. It now spends less than 80% of its ad budget on traditional TV and print ads.

The risk is that viewers will eventually get turned off by the commercial clutter in shows. Then it'll be time to find the next big idea in this ongoing cat and mouse game 'twixt viewers and marketers.

ENDS

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