Jim Marshall on Value and Accountability

In his first monthly column for Newsline Jim Marshall, Starcom Mediavest’s executive director and chairman of the IPA Media Futures Group, sees a very different media world on the close horizon for buyers and sellers…

“The Times They Are A-Changin’ “

Television prices are currently at early 1980’s levels, press prices are significantly down versus last year, as are radio prices. Indeed there is incredible value to be had across all media sectors, particularly for short term deals. Even the internet, which (outside of search) is experiencing stuttering revenues, is offering better deals.

This is hardly surprising given the current decline in advertising revenues and the unlikely prospect of economic recovery until probably well into next year.

However, during this period of unprecedented opportunity for media buyers to “fill their boots”, we face come significant dilemmas.

Firstly, we are likely to see fundamental changes in the structure of media. The fact is that most of the media sectors are unsustainable based on current advertising revenues. There will have to be mergers and closures with ultimately less media – fewer commercial television companies, newspapers (national and regional) and billboard sites, and further local radio station closures.

And less media will bring with it potentially increased pricing.

Secondly, a restructured media landscape, will result in a different negotiating approach on the part of media owners. For example. for television, there will be consolidation of the sales houses – it is possible that by the end of this year at least two could be gone with the sale of Virgin and possible mergers involving Channel 4 and /or Five. Additionally, in television, the Contract Rights Renewal (CRR) regulation of ITV could be relaxed.

What will all this mean?

Inevitably this ‘new order’ in television sales will attempt to leverage their best content (prime time shows) and introduce a much greater degree of differentiated pricing. This will only be achievable by moving away from the current station average price mechanism, for at least certain parts of their inventory.

Other media are also increasingly likely to introduce differentiated pricing, dependant on the quality of their content and the leveraging power of their sales. Clearly this already exists to some extent, but we should expect a widening of the gap in pricing between the most valued newspapers, magazines, radio shows etc and the rest.

Finally, and arguably most importantly, we are going to have to reevaluate our definitions of value and approach to accountability.

At the moment we still apply 20th century metrics: Each medium is evaluated separately and we still tend to assume that we are operating in homogenous markets – a potentially too ‘commoditised’ approach. Actually it’s a pretty lazy approach to accountability – double digit pricing deflation and a nod from an auditor that the comparative performance is up to scratch and the job feels done.

As Bob Dylan said:

“Times They Are A-Changin’ ”

Ironically, though media is going through a technological revolution, the economic recession is going to force a fundamental restructuring of the media landscape – across both traditional and digital media.

Those media owners that will survive and prosper will be those that have both valuable content and the ability to monetise that content. And importantly monetise the content across various distribution channels. It will require a different approach to selling because, unlike the 1980’s and 1990’s, money in the form of advertising revenue will not just automatically come rolling in (as is rather painfully apparent now!).

At the same time advertisers and their agencies are going to have to be considerably more sophisticated in the assessment of value. There will still be plenty of ‘cheap’ media available. However, real value will be determined by how campaigns are structured around effective content both within individual media and across different channels and platforms.

It cannot be a case of: “knowing the price of everything, but the value of nothing”, which is what it still feels a bit like at the moment.

Indeed, irrespective of the opportunities generated from new media developments (whether VOD, mobile etc), the old/traditional media are going to be changing their pricing approach because, quite simply, they have to in order to survive.

Do you agree with Jim? Send us your opinion – news@mediatel.co.uk