- Television, radio and print sectors to all experience a drop in revenue
- Online advertising spend is expected to increase by 20% to reach €541 million
- Core is calling for the establishment of an Irish Media Owners’ Association to discuss the future of the indigenous media market and address issues
A 6.7% increase in advertising spend in Ireland will see revenues reach €1.074 billion, according to new research from Core, Ireland’s largest marketing communications group. This increase will mark the sixth consecutive year of growth in advertising investment levels in the Republic of Ireland and is in line with general economic growth.
The figures are contained in ‘Outlook 2018’, an annual document produced by Core which forecasts spend for the next 12 months across a variety of media, including Television, Radio, Print, Online, Sponsorship, Direct Mail and Out-of-Home. The report also outlines the key developments and important issues that will impact the industry this year.
Core has restated the size of the media market this year. Assessing the level of advertising spend (in media) in Ireland is needlessly difficult. The real ‘problem child’ continues to be online advertising. None of the major players disclose their revenue, which has resulted in massive variations in valuations of the sector; in 2017, Core believes that agencies under-called online ad spend by 27%, while the online sector itself significantly over-valued it by 32%. Core estimates the real level of online advertising expenditure (gross of commission) in the Republic of Ireland at €451 million for 2017.
This is significantly higher than previous estimates and is driven by a restatement of the level of direct spend that is going to Google and Facebook by thousands of small and medium-sized businesses throughout Ireland. This restatement has added €123 million to previous estimates of total amount of advertising money spent on advertising in Ireland.
Commenting on this issue, Alan Cox, CEO of Core, says: “All media owners should submit their advertising revenue figures to an independent accountancy firm on an annual basis, so that we can discuss the Irish media market and its value with confidence and without ambiguity. To facilitate this will require the creation of an Irish Media Owners’ Association, which is long overdue. The purpose of such an association would go far beyond the issue of spend data. A forum for media owners to discuss the future of the indigenous media market and address issues of common concern is urgently required.”
Some of the highlights contained in Core’s Outlook 2018 report are:
Unhealthy Dominance of Google & Facebook
Although a great year for profits, 2017 was a year both Google and Facebook probably want to forget due to multiple controversies around how their businesses operate. These include Russia’s influence in the US election, Facebook’s dysfunctional relationship with news (fake or otherwise), incorrect reporting of advertising performance, ads appearing beside inappropriate content on YouTube, prominent placement of Google’s comparison shopping service in search results and, most recently, a focus on whether Facebook’s algorithms encourage addictive behaviour.
These issues, however, have made little difference to Google and Facebook’s dominance as advertising platforms so far. We estimate that 58% of all digital spend goes to these platforms and there is no sign of this abating.
The consequences of this dominance in the Irish market are far-reaching and must be addressed. It is important that global media companies, such as Facebook and Google, do not secure a disproportionate level of advertising spend, or it will have the unintended consequence of closing publishers and broadcasters in this country, thereby denying the public of Irish-produced analysis, opinion and entertainment, which are essential to our democracy and identity.
We are not advocating a policy of protectionism; that is a short-term fix, which usually results in poor practices and weaker innovation in the long run. However, the Government has a major responsibility to ensure that a level playing field exists. Recently, the UK Government announced a review into the future of the newspaper industry, warning that the closure of hundreds of titles was a “danger to democracy” and that high-quality journalism was a “force for good”. We agree, but this is not just about news publishers, it affects all media. As a first step, the Irish Government should widen the remit of the Minister for Communications to include all media, and reallocate other parts of the ministerial portfolio, to ensure adequate time is given to this massively important and evolving issue.
It must also be said that Irish media owners should not expect the Government to do their job for them. They need to double-down, find a ‘north star’ for their business and invest behind it. Long-term strategic planning is lacking in the media sector, unfortunately.
TV – Alive & Kicking
Fake news was the phrase of 2017. In marketing terms, there is no better example of this than the headline ‘Television is Dead’. Linear TV (live TV plus playback within a seven-day period) represented 79.7% of ALL video consumption for Irish adults aged 15 and over, in 2017. The other 20.3% represents video-on-demand (VOD) players, YouTube, Netflix, Amazon Prime, pay-per-view and so on. So, despite all the options available, four out of five minutes of video content remains linear TV.
It is true that younger audiences are slowly migrating to other platforms and devices; nevertheless, 55.5% of video consumption remains traditional linear TV for Adults aged 15-34. Video consumption will continue to evolve but, with the average viewer watching 37 commercials every day or 13,538 adverts per year on linear TV, it is safe to safe that television in Ireland is still alive and kicking.
Core calls for an Ireland TV Player
One in five of all TV sets in Irish homes are now connected to the internet. This new technology is having a huge impact on the availability of content to Irish viewers. RTÉ, TV3 and other Irish broadcasters are directly competing with global players who have multi-billion euro programming budgets. Many of these smart TV’s are now bundled with Netflix or other subscription services and programme choices are now decided by favourite apps, rather than the traditional TV channel menu.
Dividing Irish content amongst three or four apps will not be a successful model. Therefore, we call on the Irish broadcasters to come together and offer one ‘Ireland TV Player’, with content-rich archives, live streaming and, most importantly, no cost to the viewer. If you want to compete with global powerhouses, you must develop a local powerhouse to take them on. If the will exists to put aside years of competing for media budgets, then this would be a significant step to keeping Irish TV strong into the future.
Online video advertising not fit for purpose
Making the creative fit the medium is one of the age-old axioms of advertising. When it comes to online video, there is a lack of original creative designed with this medium in mind. With less than 30% of original content created for online video, there is an over-reliance on using existing television copy to fill this space. At best, this is creating a poor viewing experience; at worst, it is damaging brands and turning viewers to subscription, ad free options.
Online video advertising should be treated as a billboard, with many advertisers now trimming commercials to less than five seconds. Producing multiple creative executions can be challenging, but it is now essential. We wouldn’t design a 96-sheet outdoor poster with a bus shelter in mind; therefore, the same rules should apply to video.
Broadcasting Authority of Ireland (BAI) must encourage innovation
Audio is no longer the preserve of the FM band, yet until recently the Broadcasting Authority of Ireland (BAI) has been focussed on growing the number of analogue FM licenses and maintaining outdated quotas in relation to news and current affairs. The BAI understands that this approach needs to change; it is not in step with the way listenership is moving. The industry is beset by inertia and leadership is badly needed to encourage broadcasters to future-gaze, to be creative and to develop plans for the next era of the medium.
Innovation should be encouraged, not restricted. Central to this is a need to change the way contracts are awarded. We need licenses to stop focusing on FM and award contracts that keep pace with the new digital age. Broadcasters should be encouraged to change, to evolve and to innovate and be rewarded for doing so. They should have to re-tender for their licenses every five years with a priority placed on a proven track record of innovation. This is the incentive that will break the latent cycle of inertia and create a culture of creativity.
We need a ‘Spotify for News Media’
According to the Reuters Institute, only 10% of Irish adults pay to access online news content. If this level of take-up does not increase, the future is bleak for this most valuable and important sector of Irish media.
The existing paywall subscription model will never attract sufficiently large audience numbers for most mainstream news media (although there will always be exceptions; e.g. The New York Times). One factor is what we get for our subscription; with Netflix and Spotify, we’re offered a plethora of products in return for a single sign up. Paywalls don’t follow this approach, instead offering the consumer one product in return for their subscription.
But with the right collaboration, there is a potential solution to this problem. If consumers had a ‘Spotify for News Media’, which gave them access to all the major Irish news brands in an easy, consistent and navigable format, it could successfully provide a platform to simplify decision making and embed news media in the daily life of the consumer for years to come.
Consumers would be asked to pay a monthly subscription for unlimited access. And as well as delivering a range of content from all Irish news media, the service would enable customisation to the specific needs of users.
Digital out-of-home formats will account for 18% for total sector spend in 2018
There was significant investment in the digital out-of-home (OOH) network in 2017, most notably the introduction of the first large format digital structure in Ballsbridge (Dublin) by JCDecaux. There is much to look forward to in the year ahead. Growth will be driven by JCDecaux, which plans to convert 22 of its ‘Metropanel’ sites to ‘Digipanels’ by the summer.
Over the past six years, the digital network has grown at a modest pace compared to other European markets, but the appetite for change is certainly there and gained momentum in 2017. However, while we are starting to pick up the pace, growth will still be moderate for two reasons: firstly, city planning in Ireland is very conservative and slow to change; secondly, while the cost to develop digital signage has reduced (in some cases by up to 50%), the capital outlay and maintenance costs are still considerable for media owners.
On the other side, advertisers are demanding a more developed digital OOH infrastructure in Ireland to bring much-needed flexibility and dynamism to the medium. This presents us with a ‘chicken and egg’ type scenario: not all brands will fully embrace digital OOH until there is a more established network with a better geographical spread, but media owners may be reluctant to invest at pace if these new formats are not fully supported by advertisers.
The changing face of sports broadcasting
The sports broadcast market is reaching its most critical point since the arrival of pay TV. The game-changer here is the rise of social broadcasting. Both Twitter and Facebook are pushing their ‘live’ functionality, which will increasingly take share of viewing from traditional broadcasters. Twitter has announced that sport is one of the main channels it plans to develop. Facebook already has several live streaming deals in place in the US, including Major League Baseball, Major League Soccer and UEFA (Champions League matches). It was highly anticipated that both Facebook and Amazon would compete with Sky and BT for the next Premier League contracts (starting with the 2019-20 season). At the time of writing, Sky & BT have won five of the seven packages and it is rumoured that Amazon is the only ‘new contender’ still in the mix for the remaining two, as it seems Facebook is not taking part.
The transformation of the broadcast landscape means that now, more than ever before, sponsorship measurement and reporting will become both more complex and important. All stakeholders need a sophisticated and reliable measurement process, backed by experts who understand how to measure the impact and maximise the potential from each channel.
Core (formerly Core Media) is Ireland’s largest marketing communications company; it consists of nine distinct practices: Creative, Data, Investment, Learning, Media, Recruitment, Research, Sponsorship and Strategy. The company also incorporates Mediaworks, Spark Foundry, Starcom and Zenith.
Core has been voted Agency Network of the Year for the last five years at the Media Awards and the company was also recently voted one of the top workplaces in Ireland by the Great Place to Work Institute for the ninth year running.
For further details, please check out www.onecore.ie