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ARM Weekly Media News Update

17th December 2015

GroupM agrees £500m deal with Channel 4 By Kris Archer

Has the X Factor lost its X Factor!? By Craig Berg

Amazon Prime hits the mark with High Castle By Sophie Billington

How privacy is changing the digital landscape By Luigi Raw

TV

GroupM agrees £500m deal with Channel 4 for the next 2 years

Following the highly publicised fallout between the UK’s biggest media agency and Channel 4 sales at the start of 2013, it has recently been published that a new deal has been struck for the next two years, at a reported value of c. £500 million – nothing like leaving these things to the last minute! The deal will cover both GroupM as well as their content arm, GroupM Entertainment, as they look to supply Channel 4 with some advertiser-funded shows as encompassed in previous deals. GroupM controls about 30% of the TV ad market and spends an estimated £250 million a year with Channel 4, whose saleshouse has an annual turnover of nearly £1 billion. All Response Media Viewpoint

With the TV market continuing to see ever-increasing pressures from rising advertiser’s TV spends versus declining audiences, agreeing a two year deal would seem sensible, especially against the backdrop of market consolidation, where Sky continues to dominate and is highly likely to look to evolve its channels mix moving into 2016. My concern to the deal two-fold:

1. The length of the deal: Although I’m sure there will be pricing benefits for agreeing a longer term commitment, GroupM have predominately committed advertiser’s spend to a media owner, with budgets potentially not even been briefed to their agencies. A risky strategy, as audience behaviour continues to evolve and ROI becomes more paramount to the traditional brand approach to TV.

2. The AFP element: Surely with a deal this size, it would be more interesting to see how Channel 4

would be reinvesting this revenue into new, relevant programming, as opposed to agreeing a deal with the media agency to get their client to commit to producing this content for them.

Overall, time will tell whether the deal is really in the best interests of clients, rather than the lining of pockets for both agencies and saleshouse.

By Kris Archer, Group Account Director

Fourth series of Luther opens with lowest début yet One on TV's most popular haunted detectives returned to BBC One on Wednesday this week, as Idris Elba returned for an extremely short fourth series of London's top shelf moody copper, Luther (9pm). The first of two episodes reintroduced viewers to Elba's ex-cop John Luther, now living in an isolated cliff-top cabin in Broadchurch and upping the 'troubled' factor by 200%, as he was dragged back into action by the arrival of London's latest OTT serial killer. Now a Hollywood star, Elba's busy schedule (Star Trek Beyond, Marvel's Thor) ensured that Luther was only ever going to return for a very limited run. The first series consisted of six episodes and kicked off with 5.6 million viewers in May 2010, following with just four episodes in June 2011, which debuted with another 5.6 million. Wednesday night brought in just 4.9 million viewers, the show's lowest-ever début audience, although this was enough to secure the 9pm slot with a 23% share.

Amazon Prime hits the mark with High Castle

There is a fervour surrounding Amazon Prime's biggest-ever release to date, The Man in the High Castle. A series based on Phillip K. Dick’s award winning novel, which explores what it would be like if the allied powers had lost WWII, executively produced by Ridley Scott. Since commencing its development of original content, The Man in the High Castle is proving to be the most watched series Amazon Prime has created. Amazon's investment indicates they are vying to take a slice of the subscription based market away from competitors, the largest of which, Sky currently holds over 12 million customers in the UK and Ireland. Traditional broadcast and cinema are looking at this with a cautious eye as Amazon Prime boosts its subscriptions with the likes of High Castle and other high profile acquisitions, such as Jeremy Clarkson's new car show. Will the expansion of popular content via Amazon Prime accelerate the gradual shift away from linear viewing we are seeing, particularly in the younger age bands? All Response Media Viewpoint

This could be seen as a threat to linear TV advertising if more viewers are moving to alternative methods of viewing new and original content on the likes of Prime and Netflix. The latest figures from BARB show that commercial TV’s share of linear viewing was 67% in October, with the average viewer watching just 2 minutes less commercial TV than in 2014 and 16-34’s watching 6 minutes less than last year. This shows that there is a very gradual migration in viewing year-on-year. Combined with the fact that Amazon does not disclose the number of subscribers it has, or viewing figures, Amazon can potentially claim unsubstantiated success. Currently there aren’t any advertising opportunities on Amazon Prime, but if they did come available in the future we would want insight of viewing figures.

By Sophie Billington, Media Planner Buyer

Has The X Factor lost its X Factor!?

Initial overnight viewing figures from last Sunday’s X Factor final are at their second lowest since its inception in 2004, with just 8.2 million viewers witnessing Louisa Johnson from Essex take the crown. Taking into account consolidated figures yield, on average, an 11% increase against overnight figures, we can expect the consolidated figure to be around 9.1 million. This means viewing figures are likely to be down 8% year-on-year and incredibly down 45% versus the 16.6 million who witnessed the final in 2010. These figures are hardly surprising however, given that on X Factor’s opening Saturday viewing figures were down 25% year-on-year. Are viewers simply getting bored of X Factor now in its 12th series? Perhaps the constant tinkering of the format, coupled with a regular change of judges have put viewers off? Whatever the reason, this must be a concern to Simon Cowell, but also to ITV and their predicted advertising revenue. All Response Media Viewpoint

Whilst analysing why ratings for The X Factor final were at their second lowest ever, we can’t fail to mention BBC One’s Strictly Come Dancing (SCD). SCD has certainly gained in popularity in the past few years. Last Saturday’s show provided 9.4 million viewers, whilst Sunday’s show went even further with 10.8 million for its penultimate show (44% share). It should be noted that last Sunday’s SCD did not clash with The X Factor final (34% share), and simply shows that the BBC is triumphing over ITV when it comes to audience share for primetime television. ITV now have a considerable challenge on their hands to win back viewers and therefore increase advertising revenue from advertisers looking to attract the lucrative 16-34 audience. Their recent acquisition of The Voice from the BBC shows they are attempting to bridge the gap, however this also presents The X Factor with an even greater challenge if it is to continue to attract a considerable market share.

By Craig Berg, Senior Media Planner Buyer

Digital

How privacy is changing the digital landscape

I am sure everyone has read or heard of a case recently involving internet privacy and how the way people are browsing is changing at a rapid rate. The effect in some areas has been referred to as the ‘Edward Snowden Effect’, and what this means simply is that an increasing number of users are taking privacy seriously. What this has also led to is a number of companies including Google, Microsoft and Comodo changing how they do things. Google for example are making it easier for users to privately browse the internet, Microsoft are setting up servers outside the US to help bypass changes in privacy laws and Comodo are offering ways to ‘anonymise’ web browsing. With this we have also seen a significant increase in other security, privacy and anonymising software. There are two major players in the market at this time; one is VPN (Virtual Private Network), allowing users to bounce web traffic through a third-party secure server which effectively anonymises data and reduces chances of outside ‘snooping’; the other is TOR (The Onion Router) which, although it received some bad press recently, is one of the fastest growing networks at this time. Usage of these services has increased over 38% since 2014 with TOR seeing the largest increase. This change in browsing habits also brings a change in how we have to setup websites, tracking, marketing, etc. in that we have to be mindful that some users may be using these services or technologies. This makes the testing and analysing phase of website and marketing implementations more important than ever. Here at All Response, when building a new website or setting up new tracking implementations we will look at various browsing types. For example, the TOR network uses a dedicated browser that forces secure web browsing (via HTTPS) which can cause some websites to stop working. Websites that do not currently use this technology should be tested anyway to make sure they can work via a secure connection. Also these browsers can block cookies and JavaScript which some sites can be heavily reliant on. By testing this we can ensure that any strategies we implement at ARM, from DoubleClick through to ARM’s very own ARMalytics suite, can work in a number of browsing environments. All Response Media Viewpoint

As an agency we also take privacy and security seriously and appreciate that these users are protecting themselves from the increasing number of hacks, scams and malwares that are around the web. We take this and client data security into account when setting up any new strategy and offer transparency on the data we are utilising across marketing. Interesting side note: TOR is heavily associated with the dark web* however in a report release in Q1 2015 it was found that traffic through this service only makes up 6% on ‘dark web’ sites with the remaining traffic using the service for normal browsing with a view on privacy. *dark web is a term used for a group of sites that can only be accessed by a secure relay network (i.e. TOR, I2B, etc.) and cannot be tracked, monitored, or even registered. TOR sites generally have a ‘.onion’ based URL. These sites house some of the webs less-than-legal content including one site that has been in the new a lot called ‘Silk Road’.

By Luigi Raw, Tech Ops Analyst If you no longer wish to receive any further issues of ARM Weekly, please click here to unsubscribe.