Core Media Outlook 2014

8/9/2019 Core Media Outlook 2014

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OUTLOOK 14


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CONTENTS


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INTRODUCTION 2

THE CONSUMER 4

TELEVISION 6

NEWS MEDIA 8

ONLINE 10

RADIO 12

OUT OF HOME 14

CINEMA 16

SPONSORSHIP 18

DIRECT MARKETING 20


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Following six successive years of decline, there is a general consensus that the advertising economy reached bedrock lastyear. All key economic indicators are showing that confidence is slowly returning to the boardroom and the household.The economy is no longer in recession, we have exited the bailout and both business and consumer confidence levels areon the up. This trend is also being echoed in Northern Ireland.

All this points towards modest growth of 3% in advertising investment levels in both parts of the island in the coming year.The digital sector will continue to be the growth engine, with spend increasing by 12%. Stripping digital out, the spend in

traditional media will be flat year-on-year.Last year we called on Government to consider tax incentives for advertisers due to the positive effect advertising spendhas on the economy. This led to us commissioning a report from Deloitte, in conjunction with Google, Independent News& Media and RTÉ. This proved the link between advertising and economic growth across a range of sectors. It showedthat € 1 of advertising spend generates€ 5.7 on average for theIrish economy. The next step this year will be to prepare asubmission to the Oireachtas, in advance of the Budget, to keepthis issue in front of Government.

The subject we would like to focus on in this year’s introduction isbudget setting; it is the most important action in your marketingplan, but it is the action that often gets the least consideration.

There are many ways to set a budget; advertising-to-sales ratio,advertising-to-margin ratio, inflation multiplier, affordability,matching competitors and modelling. Many large multi-nationalshave adopted the advertising-to-sales ratio approach, but this canbe an unreliable method; it is simply an accounting rule to create aproportionate fund; it is not based on specific marketing objectivesand should be treated with caution.

While modelling is undoubtedly the best method to establish theoptimum level of investment, it is not accessible to all marketers dueto the cost involved and the resource required to collate all the inputs.

In the absence of modelling, the best and most practical method is share-of-voice (SOV) planning. SOV is a reliable KPI,which is strongly correlated with brand performance. Research clearly shows that a brand’s SOV needs to reflect its desiredmarket share, in most cases, to achieve success.

The most impressive study carried out on this subject was published by the World Advertising Research Centre on behalfof the UK Institute of Practitioners in Advertising (IPA) in 2007. The findings are drawn from the analysis of 128 campaigns.

INTRODUCTION

725.2704.7 725.9

156.9

2012 2013 2014 (e)

158.8 163.4

ROI NI

Source: Core Media EstimatesExcludes Sponsorship & Direct Marketing

TOTAL SPEND ( € M)

2


5/24

This highly acclaimed study confirmed and corroborated previous research, such as the 1990 study of 1,096 brands carried out by the renowned advertising guru John Philip Jones in the US and the 2001 study of 26 FMCG categories conducted by Stephan Buck in the UK.

The following chart explains the principle; for every category there is a level of investment that provides stable market share. This level of investment provides a point ofequilibrium or stability for the brand. If your brand’s SOV is above the point of equilibrium, then market share will generally rise, but if your investment falls below this point,you can expect to see the brand’s market share decline over time.

This rule has proven to be reliable for brands in many different categories; it is as relevant for cars

as it is for FMCG brands. However, it’s not just about how much money you spend; the flighting ofactivity is also vital. The best predictor of growth is the ‘excess share-of-voice’ at the beginning ofthe campaign, not the end. There must also be consistency in your investment throughout the year;an ‘on-again, off-again’ approach is not as effective.

The important rule of thumb to memorise is that for every point of market share you wish to gainin a year, your share-of-voice needs to be ten points above your current market share.

Larger brands have an advantage; they need to spend less proportionately to maintain market share,because they tend to have advantages in terms of price, distribution and innovation. The researchshows that brands with market share greater than 25% can maintain their position with a SOV 5%lower than their market share. On the other hand, brands with less than 10% market share need aSOV which is 4% greater than their market share to maintain their equilibrium.

The stage in the brand’s life cycle is also an important consideration; excess SOV has a greaterimpact on younger, growing categories than more mature sectors.

On first reading, these rules may appear to over simplify such an important process.

“Surely ,” you may say,“creative must play a disproportionately important role in all of this. How can you exclude the power of my wonderful TV commercial, compared to that rubbish my competitors are running?”

Of course creative is disproportionately influential and if you know that your advertising copy performs in the ‘top right hand box’, then you should make allowance for this.However, very few advertising campaigns benefit from breakthrough creative; the truth is that most advertising campaigns are average performers from a creative perspective.This explains why the correlation exists between SOV and market share in the first place.

While the economy may be showing signs of recovery, we are not out of the woods yet. Advertising budgets should always be treated with respect; having a clear budget-setting strategy is the key to effective return on investment, which, at the end of the day, is what advertising is all about.

Now the lecture is out of the way, we hope you enjoy the following pages, which provide an overview of the key developments we expect to see this year across each sector of ourindustry. I hope you find the content useful and if you would like to discuss any of the issues, please feel free to call me on +353 1 649 6458.

In the meantime, best wishes for 2014.

Alan Cox

00 20 40 60 80 100 120

20

40

80

60

120

100

S O V %

Market Share%

Source: IPA dataMINE

This brand is overspending:expect share to rise This brand is underspending:share should fall

This brand isin equilibrium

THE CONCEPT OF EQUILIBRIUM SOV

FOR EVERY POINT OF MARKET SHARE YOU WISH TO GAIN, YOUR SHARE-OF-

VOICE NEEDS TO BE TEN POINTS ABOVE

YOUR CURRENT MARKET SHARE

Brands sitting above the line outperformbrands that sit below it

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In 2013 the consumer mood was much like the weather – mild but mixed, although there is some long overdue positivityin the air as we look to 2014. The good weather across the summer certainly had an impact and many categories benefitedfrom the rise in temperature and spirits.

However, news of the ongoing economic recovery and the Budget move to October (in ROI) didn’t seem to improve retailfortunes for Christmas 2013. Heavy rain and flooding dampened pre-Christmas excitement meaning sentiment, which wasat its highest in the Republic since June 2007 (80 months!) did not translate into increased spending.

Here’s our take on what’s going on:

The Good: An upward trend in almost every index and measure of positive sentiment means at last there is some goodnews. 88% of people are looking forward to 2014*. Exiting the bailout and the hot summer were the stand-out momentsfor the consumer in 2013, according to our 1,000 strong consumer panel. In 2014 saving is still high on the agenda, closelyfollowed by paying off debt, but those with spare cash are ready to spend it on experiences that enrich their lives (16% ofpeople plan to loosen their belts). The power of sport to help drive optimism is clear from the chatter around the newsoccer and rugby coaches. Hope is here, but so too is expectation.

The Bad: People are still struggling and though Budget 2014 wasbetter than expected, for most people it just meant that their situationdidn’t get any more difficult. Almost two thirds of people describethemselves as surviving, struggling or worse. The increased optimismis not likely to turn immediately into greater spending in 2014, aspeople adopt a wait and see approach. They feel that much of theirfinancial situation is out of their control, but any discretionary spendis very much within their control, and they are well-controlled whenspending it.

The Ugly: The CRC scandal, amongst others, means trust in institutions is low. This is leading to a sense of frustration withthe way companies are being run, and an expectation of full disclosure of any wrong-doing. This is a dangerous situationfor brands as consumers will voice their disgust when and where they know their voices will be heard. Not always able totake out their frustrations on the Government and institutions means a willingness to rip brands apart for mistakes.

So, what does the 2014 consumer want and expect from brands?

*Source: Ignite Research Consumer Panel Jan 2014, n=1,000

88% OF PEOPLE ARE LOOKING

FORWARD TO 2014

THECONSUMER

4


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5

01LISTENING 02 UPFRONT DATA POLICIES

03 BLURRED LINES

Consumers are wiser, have access to moreinformation and are advising each other more thanever before. Our own Touchpoints studies into themost effective consumer contact points show ‘advice from family and friends’ to be the single biggest

influencing factor across almost every singleconsumer category. Blogs and forums also fare wellas consumers actively seek out and trust impartialadvice. This is bigger than packaging, in-storesignage, free product trials, and it far out-weighs anymass media (including TV!) in terms of influence. Yetmarketers are still not spending enough time thinkingabout how they can influence the conversation as ithappens. It seems brands are still far too interestedin saying what they want to say, rather than what theconsumer actually wants to hear.

IMPLICATIONListen to consumers and get involved in theconversation. Invest in real-time social listening tools.Why bother knowing whether they liked your TV commercial six months ago; spend your time and putyour efforts into listening to what they have to say today, because the conversations are happening withor without you. Be prepared and anticipate thepossible reactions to your campaign; don’t justapprove the TV commercial and stop there. Adaptyour campaigns as they happen. The consumer ismoving faster than you are; be nimble, keep up, andmake your agencies do the same! Oh and check out the Esurance commercial in the outbreak of therecent Super Bowl to see what we mean!

Consumers are increasingly aware of their onlinebehaviour and the data footprint this leaves behind.The global coverage of whistleblowing and CIA spyinghas fuelled the levels of mistrust of companies. At thesame time, there is a conflict for the consumer; they

are seeking personalised brand experiences which are tailored specifically to their interests.

In 2014 consumers will be increasingly engaged with their data and will be mindful of how companies areusing it. This will bring some challenges for brands.Get it right and the consumer will buy from you again;get it wrong and they will be waiting to catch you out.

IMPLICATIONData governance and ethics must be observed, but this is not a reason to shy away from using data.Brands that use data to understand consumers andgive them what they want will put themselves in apowerful position and actually improve therelationship. Open and upfront policies will build trustand make people more likely to let you use their data,especially if it means superior brand experiences for them. This can bring you even closer to the consumer.Brands and companies who get ahead of this willavoid the potential sleeping giant of negativecustomer and public perception.

Irish consumers claim 28% of their entire Christmasspend was conducted online in 2013. It is possible, then, that overall spending was up at Christmas, butmoved in part to online retailers, and ultimately outof the country to companies like Amazon. Online

sales of non-food items, in the UK, rose by 20% inDecember alone. The lines are continuing to blur between online and offline for research andpurchase. We can no longer deny the crucial roleonline plays in the consumer journey and thedecision making process, regardless of where the transaction finally takes place. ROPO (researchonline, purchase offline) and its opposite buzz word‘showrooming’ are not ‘online behaviours’ anymore, they are just simplybehaviours.

IMPLICATIONIrish retailers and brands have been slow to keep upwith the consumers pace and must start to catch upin 2014. The retailers excelling online are those whoprovide a fantastic omni-channel customer experience from start to finish. Those that arestruggling to keep up are not providing a hassle-freeexperience for the customer; they are just adding to the growing frustration the consumer feels whenwebsites don’t work properly. Optimising theexperience for mobile is a priority as online sales arebeing driven by smartphones and tablets. Expect tosee virtual sellers partner with physical stores or realestate owners, to provide new and efficient ways for customers to click and collect in their own time.

28% OF CHRISTMAS SHOPPINGWAS ONLINE IN 201328% 30% 32% 32%

16%

All 25-34 35-4918-24 50+

WHAT % OF YOUR CHRISTMASSHOPPING WAS DONE ONLINE

*Source: Ignite Research Jan 2014, n=1,000


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The average viewer in Ireland in 2013 watched over 24 hours of television per week; that’s a huge amount of time. Indeed,the average viewer saw over 14,000 commercials across the year. However, despite the continued strengths of ‘traditionaltelevision’, 2013 was a watershed year. It marked the first decline in viewing to a television set since 2009 in the Republic,and since 2007 in Northern Ireland. Although the declines were only 2.7% and 0.7% respectively, viewing habits arecontinually changing; 2014 will be remembered as the year that campaigns combining TV & video-on-demand (VOD) becamethe norm.

54% of the Republic’s TV homes now have access to a digital video recorder (DVR). In the North, this figure rises to 57%.Not only has the penetration increased, but viewers have owned devices for longer, and evidence shows that the longer youown a DVR the more you use it. Time-shifted viewing in the South has increased from 9% to 10% and will grow further to12% in 2014. Similar levels are predicted for Northern Ireland also.

Across the island of Ireland we estimate that content viewed onnon-TV devices accounts for 11% of all viewing; this will growto 14% in 2014 as technology becomes more accessible, fasterand mobile screens become bigger.

The so-called ‘over-the-top’ platforms are also gathering pace;despite over 700 TV channels being available in Ireland,viewers still want more choice. Sky Go is now available for 56

channels, across multi-platforms and is free to Sky subscribers.Sky On Demand now offers a catch up service, with Irishchannels included.

According to Nielsen, over 7% of the population in the Republic (16% in NI) claim to subscribe to an additional TV downloadservice. The most popular of these services is Netflix, which launched its first bespoke programme series in 2013 with Houseof Cards. The final episode of Breaking Bad was shown in Ireland on Netflix one day after the US, before any Irish or UK channel. More new shows have been commissioned by Netflix as part of a $3 billion investment in content in 2014. YouTubewill also expand its subscription TV services in 2014, with a potential global audience of over one billion.

While there will always be large demand for ‘the big box in the corner’, linear TV is now managing decline. But, with thisdecline, we are seeing more video content being watched than ever before, just in different ways. New operators are bringingmore innovation to the market and this will ultimately deliver a more engaged and receptive audience. Despite the slight fallin audience levels, we do expect TV spend levels to increase by 3% in the Republic and 4% in Northern Ireland, due to thebrighter economic outlook.

CONTENT VIEWEDON NON-TV DEVICESWILL ACCOUNT FOR14% OF ALL VIEWING

THIS YEAR

TELEVISION6


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01CHANNEL 4 AND UTV IRELAND LAUNCH

02 32 COUNTY TV COMESOF AGE

03 VIEWINGDIVERSIFICATION

7

Two events in 2014 will make this year one of themost significant for TV planning and buying. Theseevents bookend the year, but their effects coulddetermine the shape of the TV market for years tocome. They are the launch of a Channel 4 opt-out in

the Republic in January and the build up to thelaunch of UTV Ireland in 2015.

Opt-out channels are nothing new in Ireland, andwhile they have been welcome additions from a costefficiency point of view, they have added little whenit comes to one of the key benefits of TV, which isbuilding large coverage quickly. The Channel 4 andUTV initiatives are different; Channel 4’s opt-out willdeliver 5% of all commercial audience in Ireland andwhen UTV Ireland launches in 2015 it will deliver in the region of 16% of the market’s impacts, due inpart to Coronation Street and Emmerdale switching from TV3.

IMPLICATIONThis will force advertisers to re-examine how theyspend their TV money. Total television revenue willnot grow to match this additional supply and this willresult in a hit to the revenue expectations of RTÉ andTV3 in particular. TV3 stand to lose the most, so it isimperative that it spends its production budget onstunning Irish drama to minimise the impact of losingCoronation Street and Emmerdale. It will have to hit the bull’s-eye first time with this investment.

With the launch of UTV Ireland in 2015, advertiserswill be able to buy airtime from a supplier that deliversacross the island of Ireland, for the first time. For many years, brands have been planning ‘inspill’ into their television campaigns; however, there has never

been the chance to buy integrated cross-border campaigns. UTV Ireland has the potential to beavailable in every home in the Republic, and UTV itself is already established in every Northern IrelandTV home. 32 county buying will finally become areality in 2015.

IMPLICATION All-Ireland planning will be easier and more costefficient from 2015. The move from ‘free inspill TVRs’ to ‘paid for TVRs’ will be offset by channel mix efficiencies available.

ROI advertisers will now have over 50 channels tochoose from when planning their activity. With UTV and Channel 4 looking to grab TV share in the South,RTÉ, TV3 and TG4 will be under more pressure toexamine additional revenue streams. One area thatshould be considered is Northern Ireland. With limitedchoice for TV advertisers in the region and a per capita advertising spend of half that in the South,Northern Ireland is an attractive area for growth. RTÉis now available in 94% of homes in NI and there ispotential revenue of€ 3-4 million available.

As viewing habits shift to digital, the broadcast market,already fragmented, is going to become increasinglydiverse. 11% of all viewing last year was not on a TV set, but on laptops, tablets and mobile devices; thiswill continue apace over the coming years.

This presents advertisers with some new planningchallenges in terms of assessing the most effectiveways to reach their target audiences in this newenvironment. TAM Ireland, the television audiencemeasurement service, is developing new techniques to record audience levels to all screens, but this will take time.

IMPLICATIONWe need to gain a greater understanding of this newbroadcast mix. Some people simplify the challengeand believe that TV and VOD are the same thing; thereality is that they are very different media. Sitting forward is different to sitting back, and for that reason30 seconds online is a lifetime.

To address this, Core Media developed a bespoke AV planning tool, Corecast, to measure the optimal levelof TV and VOD activity. Through this tool, we aregathering universal data to understand view-throughlevels, whether audio is activated, whether consumersengage more on mobile versus tablets, all helpful inunderstanding the role of these channels. This willcontinue to evolve and our thinking will need to do thesame; it will become more complex, but as the next few years play out, we will gain greater insight intohow every element of the media mix interacts.

UTV IRELAND WILL DELIVER 16% ROI COMMERCIAL AUDIENCES IN 201

204.3 195.1 201.3

81.9

2012 2013

83.7 87.1

ROI NI

2014 (e)

Source: Core Media Estimates

TELEVISION SPEND ( € M)


10/24

As reported in our Outlook 13 report, the news media sector needed to re-invent itself or face consequences. In theintervening period a large amount of positive change has occurred in the industry, although a great deal more is required.Sunday newspapers launched all-week website editions, The Irish Independent launched an iPad-only app; and the IrishTimes extended its podcast series. These and other developments are moving these organisations out of a printed worldand into a multi-channel publishing world.

While circulation is, and will continue to be, a key revenue stream, diversification and brand extensions are now the normwith more and more traditional media entering the digital arena. This is particularly important as advertising spend in theprinted medium is likely to fall by 9% in 2014 in the Republic and by 5% in Northern Ireland, whereas digital media will seedouble digit growth.

Sadly, what hasn’t changed in the past year is the lack of a strong unifyingleadership within news media at industry level. The National Newspapers ofIreland (NNI) needs to modernise and engage in three key areas:

First, it must devise a sustained marketing programme that highlights the power ofnews media and their effectiveness; this requires a serious seven figure investment.The only message advertisers are hearing today is how newspapers sales aredeclining. What they do not hear is that newspapers remain hugely influential,highly demanded products; 5.5 million papers are purchased every week on this

island. Globally, 2.5 billion people read a newspaper at least once a week. Newsmedia need to start talking back!

The second task is to tackle the newspaper distribution system to get costs down.Newsagent margins will need to be renegotiated in order to provide the news media organisations with more liquidity. Finally,the NNI needs to mount a campaign to persuade Government to again reduce the VAT rate on newspapers in order to supportthe sector.

The thorny issue of whether to charge consumers for digital content is still posing difficulties for publishers across theglobe, but it is a particularly troublesome issue in Ireland, where the lack of market scale is preventing media ownersfrom charging due to concerns over limited take-up. This position is likely to be reviewed, on an ongoing basis, as newsmedia digital platforms continue to evolve.

In summary, the news media sector is very much alive. Indeed, anyone who read about the ‘Anglo Tapes’ in the IrishIndependent will attest to that; it proved the influence of the medium and demonstrated the demand for in-depthinvestigative reporting. This was newspaper journalism at its best and there will always be a market for that.

5.5 MILLIONPAPERS AREPURCHASEDEVERY WEEK

ON THISISLAND

NEWSMEDIA

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01 SATURDAY 02 CONNECTIONS 03 RESEARCH

9

Monday to Friday has always been the battleground for daily newspaper titles. However, if you dig a littledeeper there are some interesting things to note.Despite obvious circulation pressures, a combinationof strong marketing, added value supplements, and

a more leisurely reader mindset has led to weekendcirculations being very strong. Due to reportinglimitations ABC does not split out weekend vs.weekday sales, however, even a cursor y glance at theprint runs of the main daily titles shows that theweekend print market is in rude health.

IMPLICATIONThere is a significant untapped market on Saturday.It offers a real opportunity for brands to benefit fromhigher sales and a more engaged reader. Food, travel, entertainment, and literature are all covered ingreater detail than any other day. The reverse is truewith news media websites, which have stronger audiences during the week. This offers publishers theopportunity to sell joint offline/online packages tomaximise reach.

There was a time when the only way a reader couldinteract with news brands was by writing a letter to the editor. Now, news media are growing into multi- touchpoint organisations, giving the audience manyopportunities to engage and interact with their

favourite brands and journalists.Journalists are in some ways becoming the new popstars through their tweets, Facebook interactions andsignificant radio exposure. With increased onlinepresence through tablet apps and new websites,readers now have an ever greater opportunity tointeract with their publisher of choice.

IMPLICATIONIf news media can crack the strategic direction of their online assets then this presents an opportunity for brands. By using the inherent benefits of onlinecontent to break the news and the printed paper todeliver comment and analysis, audience levels tonews media can only grow.

Therefore, there is an opportunity for advertisers to tapinto this growth through coordinated deals that spanplatforms. In addition, there is an opportunity toleverage this new technology to truly showcase your brands in a dynamic and impactful manner. Theweaknesses of the print product can be counteractedby using vivid, interactive creative messages that will facilitate a value exchange within the trusted newsenvironment.

In the past much has been made of the need for more robust readership research with which to trade.In recent years there has been significant investmentmade to change the panel construction, and toaccount for online/offline readership.

Of late, however, the argument has shifted; with anincreasing requirement for accountability, it is notreadership that’s important but the return it provides.With so much choice, proof of worth has never beenmore vital.

IMPLICATIONWithout investment the news media market willcontinue to be under pressure. As BenjaminFranklin once said "an investment in knowledge pays the best interest".

What is required is a wide-scale investment ineconometric modelling that spans category andaudience. Using structural equation modelling, inparticular, the specific contribution that newsbrands make to advertising campaigns can beisolated and proven.

To do so requires funding and whilst unpalatable tomany within the NNI, it is crucial to the future successof the sector. Is it affordable? Well, by apportioningonly 0.25% of the total press advertising spend inIreland we would generate a fund that is more thanenough to cover the cost of this research. In our view,money well spent.


NEWSPAPER & MAGAZINE SPEND ( € M)184.0

158.2144.1

27.0

2012 2013

25.4 24.1

ROI NI

2014 (e)

Title Mon-FriPrint RunSaturdayPrint Run Difference

Irish Independent 150,000 225,000 +50%Irish Times 75,000 180,000 +140%Irish Daily Star 91,000 120,000 +32%Irish Sun 89,000 117,000 +31%Irish Daily Mirror 72,000 90,000 +25%The Herald 75,000 50,000 -33%

Irish Daily Mail 65,000 80,000 +23%Irish Examiner 60,000 75,000 +25%

A WIDE-SCALE INVESTMENIN ECONOMETRIC MODELLING

IS REQUIRED


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2013 was another strong year for the online medium, with spend increasing by 11%, taking it to over 24% share of totalmedia investment in the Republic and 11% in Northern Ireland. It is now the second largest medium in the South to TV, andwith growth set to continue ahead of all other media channels, it won’t be long before online takes the number one slot.

This continued growth is coming from the combined effect of consumers spending more and more time stitching online intotheir daily lives, and an ever-increasing understanding of the role it plays within the media mix. Through studies in the areasof econometrics and attribution we are seeing that online channels are delivering strong returns; this creates confidenceand ongoing investment.

An interesting development in 2013 was the increased use of onlineby retail advertisers, who are using the medium in combination withnewspapers and other media to drive greater reach. The ‘home pagetake over’ (HPTO) has become the new ‘early right hand page’(ERHP).

We are seeing similar developments in the broadcast arena, wherewe are now beginning to understand what video-on-demand adds tothe media mix, either through driving incremental coverage tocomplement TV campaigns, or reaching new audiences that aredrifting away from traditional set-based viewing.

Mobile has seen huge growth; the market will exceed€ 30 million in advertising revenue in 2014 across ROI & NI, and the arrivalof 4G will accelerate this further. Additionally, increased use of ‘real-time buying’ (RTB) solutions is driving growth as we emergeinto a data-driven age.

In search, Google reigns supreme, as yet unchallenged by Bing, and one has to wonder will this ever change. However, somecompetition would be good for the industry; having one player with 95% share of the market is not ideal.

In social media, we are seeing diversity emerge, and consumers’ appetite for new platforms is keen. Some studies revealthat younger audiences are becoming less attracted to Facebook as they favour micro-blogging sites like Twitter, or messagingservices such as Viber and WhatsApp. A really interesting development in 2013 was that Snapchat, the photo messagingapp, hit close to 250,000 Irish users from a standing start, which is an indicator of the pace of this dynamic sector.

One area that has yet to fully engage in digital is the business-to-business sector. The B2B industries have not been disruptedby the digital revolution, but that renaissance is going to happen over the next five years.

ONLINE COULDBECOME

THE LARGESTMEDIUM IN 2015

ONLINE10


13/24

01NEW DOMAINS 02 DATA (AGAIN) 03STUFF & THINGS

11

The.com domain is now twenty five years old, and withover 100 million registered names it is no surprise thatanyone looking to build a new brand on a global scalehas limited options, resulting in oddly spelt brandsbased on phonetics rather than the Queen’s English.

After years of debate and planning there is bigchange coming in the way that businesses and brandswill identify themselves online. Our close friends.com,.net and .ie , are going to have lots of company.ICANN, the global governing body of these domainnames is changing the ‘top level domain’ (TLD)structure by greatly expanding the internet namespace. The initiative known as the‘generic top leveldomain’ (gTLD) programme will provide increasedchoice and innovation in domain name structures.

IMPLICATIONBusinesses need to secure their trademark names asgTLDs to ensure clarity, convenience and facilitatemore relevant online visibility, e.g.music.heineken,golf.nike , etc.In addition to this, there is a whole range of genericdomain names being released. Domains such as.eat,.shop, .love , will open up some interestingopportunities for claiming content territories andconsumer attention.

One unknown is how this will affect the way websitesare found. The overwhelming majority of consumersstill use search engines to get to domains, yet the newgTLD structure is likely to change how sites areranked and found via search engines. At this stage this is one of thoseknown unknowns.

The question ‘What is our data strategy?’ is going tobe on many board agendas in 2014; it may alsohave been in 2013, but progress has been slow. Theroute to empowering your business is making dataan integral part of your business strategy, one that

fuses functions, that will ultimately drive greater business success.

In 2013 we began to tackle this challenge byemploying a range of techniques across dataaggregation, modeling and visualisation. Thisprovided new and meaningful insight to drive theperformance of our clients’ businesses. The nextphase is to move to a full data management platform(DMP) which will enhance our service offering.

IMPLICATION All businesses need to assign the responsibility for data to one of their senior management teams. Do

not repeat the errors of the past by giving it tosomeone who is ‘good with computers’ or ‘has aFacebook account’. That was a big mistake for manybusinesses when it came to digital; it will be an evenbigger mistake if it is repeated with data.

Data implementation requires a strategic approach that needs to be mapped out; it is a journey that willbe as iterative as your digital journey. It will take timeand investment and there are no quick fixes, so knuckledown and let’s get that data working for us all.

The touchpoints available for us to connect to andengage with consumers is ever-increasing; ‘theinternet of things’ is well and truly upon us -everything is becoming connected. This is about asmarter, more connected world for businesses and

consumers. Look at Google’s recent acquisitions in the area of renewables, robotics (seven in 2013) andin-home devices to see its ambitions for our future.

IMPLICATIONHow we think about marketing and connecting withconsumers requires a shift, as the options anddynamics become more lateral. Effectively, brandsneed to start thinking a bit like technology companies.

Nike has been doing this for years; it has transformedits business from an apparel brand to lifestyle innovator,and many more brands are likely to follow this path.

This means that the levels of literacy required withinmarketing teams needs to expand; the frames of reference are broadening. We are now entering anera ofwhole-brained thinking where the left side of the brain (numbers) needs to fuse with the right side(creativity) more often, and more effectively – ITand Marketing are on a collision course, in thepositive sense.

From today, communications briefs should include technology as an option; merging the physical withdigital is becoming a reality.

IRELAND IS 10TH INTHE WORLD FOR

BROADBAND SPEED


ONLINE SPEND ( € M)

155.5172.4

193.1

16.6

2011 20132012

17.8 19.4

ROI NI

2014 (e)


14/24

12

2014 looks set to be a busy year for Radio. Already, we have seen the trend toward consolidation continuing with mediaowners responding to the needs of agencies who want fewer booking points and more ways to buy mass audiences. Followingthe success of UTV Radio’s Urban Access offering Communicorp has launched Mediacentral, its cross group advertisingsolution aimed at providing a 25-44 audience across 98FM, Spin 103.8, Beat 102-103, Spin SW, iRadio NE, iRadio NW andRed FM.

This initiative has resulted in greater competition, with the different sales houses competing to attract radio stations to theirportfolio; for example, Beat FM recently defected from UTV Radio to join Mediacentral.Radio had a poor year in terms of advertising spend in 2013 in the Republic,with a decline of 6%. The medium fared better in Northern Ireland wheredemand increased by 3%. With a sense of optimism emerging, and a newinjection of energy arising from the new sales house competition, we expecta better year in 2014 in the South with growth of 4%. Growth in the Northwill be on a par with the previous year at 3%.

While consolidation has provided benefits, one source of frustration for radiostation owners, clients and agencies remains; the current radio commercialcode continues to hamper stations in the 26 counties, placing them at adisadvantage to other media.

There are a number of areas where the industry would like to see the code evolve. Sponsorship is the main area of contention.The code currently prohibits any encouragement in sponsorship stings to contact an advertiser / sponsor (e.g., “call us on..”or “check out our website..”). Similarly, the code restricts advertisers from promoting sub brands or products. For example,O2 can sponsor a programme but not mention its prepay offering. Interestingly, the industry is not calling for more advertisingminutage; in the words of one media owner “We just want to be able to do more with what we have”. Despite a submissionmade to the Broadcasting Authority of Ireland in Q4 of 2013, no response is expected until the back end of 2014.

On a more positive note, the industry has finally agreed to release a combined database within the Joint National ListenershipResearch software, allowing reach and frequency comparisons to be made between local stations and national stations. Forthe first time it will be possible to see how Morning Ireland or The Last Word, for example, compares to the equivalentprogrammes of an individual local radio station.

But it is perhaps to technology that we must turn, to find the most exciting issues facing radio in 2014.

THE MOVE TOELECTRONIC AUDIENCE

MEASUREMENTIS INEVITABLE

RADIO12


15/24

01 AUDIENCEMEASUREMENT

02 RADIO OFEVERYTHING

03 RADIO 3.0

13

The industry in the Republic stands at a crossroadsand must decide whether to keep faith with what hasbeen a reliable system, or to move to a digitalmetering solution where listenership is measured byan app on smartphones, that picks up a code in thebroadcast signal. Used in markets similar to Irelandsuch as Norway, this produces minute-by-minute datacomparable to TV; the findings are also available the following day.

IMPLICATION A simple choice you would think? Not quite; whilemetering offers many benefits, it does have itsdownsides. Reach tends to increase, but stationshares usually decline, although this is more aproblem for the radio industry, than a concern for advertisers. There is also a significant investment ininfrastructure required.

Perhaps the biggest issue is local radio; other marketsuse metering for national rather than local stations,due to the cost. The same problem exists in Ireland,meaning a twin-track system would have to beoperated. Einstein once said that “technologicalprogress is like an axe in the hands of a pathologicalcriminal”; the radio industry must decide whether toswing that axe. It is likely that a decision will be madeon this in H1 2014. In Northern Ireland, and the restof the UK, the industry remains committed to thediary method for now, but they are currently triallingaudiometers and there is an acknowledgement thata move to the electronic method is inevitable.

‘The internet of everything’ describes a world where the internet becomes part of every facet of l ife asevery device and person becomes connected. Radiois not immune to this process and rather than threatening its existence, with the likes of Spotify, theinternet may well safeguard its future.

Between three and four million radio station appshave been downloaded on the island of Ireland, asit becomes a preferred way of listening for younger audiences. As free Wi-Fi and 4G expand, and datacosts drop, this is only set to increase. Many of theseapps require customers to sign up; because of thisand embedded code known as ‘cookies’, radiostations will have access to the kind of audience data that is currently the preser ve of online networks.This opens up a world of re-targeting and geo- targeting on radio. Imagine the power of knowingsomeone was walking past a retailer and being able to serve them a specific radio commerc ial, with an

offer to pop in.

IMPLICATIONThis offers significant opportunities for advertisers todeliver more relevant messaging. There is an upside for radio too; in the online world companies likeQuantcast charge a premium due to the wealth of audience data they have. Advertisers pay more for a relevant audience that converts better. Radiostations brave enough to invest in this area may reap the benefits.

“We have an audience to sell, we don’t think of ourselves just as a radio station anymore” – the wordsof a top Irish radio executive, recently interviewed.Radio stations have always thrived on building acommunity of listeners; before you could tweet intoyour favourite show people texted; before that theycalled and before that they wrote! With such a historyof audience participation it’s no surprise that radiohas made the transition to social media better thanmost. The Facebook and Twitter profiles of many of Ireland’s radio stations are thriving communities of engaged listeners. Stations are now starting toharness this and make it part of their offering toadvertising campaigns. Just offering spots is notenough in today’s world.

IMPLICATIONRadio stations are now queuing up to offer 360⁰solutions for clients. These involve airtime,

promotions, and interaction with the station’s socialmedia community. The stations are also starting toleverage one of their greatest assets – the DJ’s. In the UK it is common practice to provide the presenter to voice the campaign, launch it in person andentertain the client’s key accounts. We are alsoseeing stations offering magazine apps and buildingvideo production studios in an attempt to better serve their audience. Spin TV and Newstalk TV are notableexamples of radio stations thinking beyond themicrophone. Video, events, social outreach, and evenradio spots, are all part of Radio 3.0.


RADIO SPEND ( € M)

121.2113.9 118.6

14.4

2012 2013

14.8 15.2

ROI NI

2014 (e)

BETWEEN 3 AND 4 MILLION RADI APPS HAVE BEEN DOWNLOADED


16/24

Out of home (OOH) was one of the few media to experience a reversal of fortune last year, with growth of 8% in the Republicof Ireland. Northern Ireland saw more modest growth of 3.5%. Almost every cycle showed an increase over the previousyear. While the media owners and the OOH specialists have been understandably reluctant to look this particular gift horsein the mouth, there have been a few suggested reasons for the uplift.

The most optimistic theory is that 2013 heralded the return of big brand advertising. During the lean years of the recession,clients became skittish about maintaining investment in their brands. Instead, they adopted a more reactive, short-termadvertising strategy, where guaranteed sales was the only criterion.This drove the already-reduced budgets into proven response driverssuch as search, online display and radio. This behaviour eventuallyleads to brand erosion, where consumers are not reminded why thefell in love with the brand in the first place. Without brand connection,it is always going to be about price. It's a self-fulfilling prophecy.

The advantages of OOH, such as impact and ubiquity, as well as someof its drawbacks, like inability to communicate detail, have meant thatit is popular as a brand-building medium. 2013 saw a number ofbrands increasing their investment in OOH for this reason. If thistheory is correct, then we should see a fall-off in more tactical media.

To a certain extent, that happened; radio had a poor year andalthough online continued to grow, it did so at a more modest level than before. Interestingly, one of the few OOH formatsto struggle last year was the more tactical, in-store and point-of-purchase sites, again backing up this theory.

The other, more pessimistic reason is that OOH simply got lucky. 2013 saw a number of big brand battles (particularly inthe telco and broadband sector in the South and fuel and finance in the North) between advertisers who historically havefavoured large format outdoor. These events tend to take place in two-year cycles, so no matter which theory is the truth -the return of the brand or flash in the pan, OOH looks in reasonably good health for 2014; advertising investment levelsshould increase by 6% in the Republic and 3% in Northern Ireland.

OUTDOOR’S ACHILLES’ HEEL

IS THE POORCREATIVE

STANDARD

OF POSTERS

OUT OF

HOME14


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01 HD OOH 02 PASSIVE TO ACTIVE 03 THE LASTBROADCAST

15

2014 begins with Exterion Media’s (formerly CBSOutdoor) takeover of the management anddevelopment of the CIÉ Group advertising estate for atleast the next five years. This includes advertising formats on Dublin Bus, Bus Éireann and IarnródÉireann properties, consisting of bridges, bus/railstations and a sizeable roadside billboard portfolio.Of interest to advertisers is that the contract term islonger than usual (five years) to encourage an overhaulof site presentation and technology. We expect theintroduction of high definition digital formats in transport hubs, on buses and perhaps in roadsideenvironments. Exterion Media has also expanded itsdigital retail offering to six high-profile malls, includingCork’s Mahon Point. Elsewhere, JCDecaux has taken the lead in billboard presentation with the ongoingexpansion of HD billboards.

IMPLICATIONInvestment in the OOH infrastructure is good news for advertisers. The lean times OOH has suffered over thepast few years have seen a deterioration in thestandard of displays. Premium display opportunitieswill ensure that 2013’s resurgence is maintained. New technologies and the expansion of digital OOH haveseen reductions in production costs and lead times,making it more appealing and accessible to marketers.Digital facilitates multiple copy changes and day-partmessaging. Creative agencies should start allowing for animation when approaching an OOH brief. Digitaldisplays will also help OOH weather the ‘big data’storm, where agencies and advertisers will demandmore accurate and real-time data from their mediachannels to justify continued investment.

Out of home is in a strong position regarding interactivecampaigns. OOH campaigns are already beingexecuted with online references such as hashtags,Facebook competitions etc. to the fore. Withsmartphone penetration increasing at such a pace andWi-Fi access becoming more freely available on public transport, in public areas and in leisure areas such aspubs and restaurants, there is an emerging natural fitbetween OOH and the online world.

IMPLICATIONThere will be more engaging interfaces across all formats such as touch, play, control, share and search.The first touch screen campaigns on digital ran in 2013on the dPod free-standing units in Dundrum TownCentre. 2014 will see digital further integrated into the Adshel bus shelter network, which will allow passers-by to interact with clients’ websites and social media.M&Ms and Ladbrokes are good examples of this type

of campaign, with the M&Ms units allowing the public to take photos on-screen with characters and upload them to Facebook. All media owners will need toembrace the inevitability of an all-digital OOH medium.Evidence suggests that consumers will welcome such adevelopment. Research carried out by Core Mediaamongst over 300 Dubliners has shown significantsupport for the digitisation of traditional poster sites.87% agree that they would look better than the currentsites. 90% believe that it would support Dublin’s claim to be a modern digital hub. 89% would support anadvertiser-funded model to make it happen, similar to the Dublin Bike Scheme.

While other media fragment around us, outdoor remains a broadcast medium, perhaps the lastbroadcast medium. It targets the mass market whileremaining particularly effective at reaching hard-to- target young upwardly mobiles in urban areas. Whileother media grapple with subscription and permissionissues, outdoor is instantly accessible and commandsattention in ‘dead’ time where demands on our attention are not so great.

Outdoor advertising is 'on' 24 hours per day. As a keyexample, Spotify chose it as its launch medium inIreland. The broadband wars saw UPC, Sky and Eircom take to the streets (on posters). As a category, internetproviders invested 215% more in OOH in 2013. It isgenerally regarded as the ‘media’s medium’ with press,cinema, TV and radio all regular users.

IMPLICATIONDespite the advantages of outdoor advertising, themedium has one significant Achilles’ heel; that is thepoor creative standard of many of Ireland’s poster campaigns. Too often posters appear to be designed likepress ads. This is particularly true of the 6-sheet format.

Multiple copy points are crammed into an area thatwill probably be viewed at a considerable distanceand speed. Designing an effective poster is notmerely a re-sizing or re-formatting exercise. Creativesand advertisers should approach it as a blank canvass. The design must be influenced by theeventual display environment and the consumptionby the viewer. Failure to do this will deliver poor results and consequently, an unfair halt to theresurgence of the medium.

93% OF DUBLINERS BELIEVE THADIGITAL OUTDOOR SITES WOULD B

GOOD INFORMATION PROVIDERSFOR THE GENERAL PUBLIC

54.2 58.3 61.8

13.9

2012 2013

14.4 14.8

ROI NI

2014 (e)


OOH SPEND ( € M)


18/24

Cinema admissions fell by just under 4% on the island of Ireland in 2013. This decline has to be set against a backdropof the increased popularity of on-demand viewing services such as Netflix, reduced disposable incomes, and emigration;a reported 90,000 people left Ireland during 2013, many of whom would be in cinema’s key demographic.

This decline in admissions was matched by a 4% fall in total box office revenue to€ 134 million, with Despicable Me 2and Iron Man 3 leading the pack. The majority of the top ten box office films were released in 3D, but the popularity ofthis format is falling as the novelty factor is wearing off for audiences, despite the extraordinary advances that have beenmade in the technology in recent years. As veteran film critic Barry Norman said “once you get over the initial shock ofsomething reaching out of the screen towards you, it addsnothing at all to a film. I’m sure people will keep on making 3Dfilms, these things come and go, but you can’t make up for baddirecting with good technology.”

Despite the decline in admissions in 2013, advertising spendincreased in the Republic by 13%, due in part to stronginvestment from the FMCG sector. However, Northern Irelandcinemas had a poor year, with spend falling by 13%.

The rollout of digital was completed last year and now all

screens, north and south, are fully converted. This enhances theviewing experiences for consumers, gives more scope andflexibility to cinema owners, and importantly gives advertisersfaster and cheaper access to the market.

Cinema admissions in Ireland should grow marginally this year with a lot of interest expected from Irish audiences in therelease of two Irish produced comedies – Calvary in April, starring Brendan Gleeson and Chris O’Dowd; and Mrs. Brown’sBoys D’Movie due for release in June. International movies to watch out for in 2014 include the latest instalments ofSpider Man, X-Men, Transformers, The Inbetweeners and Dumb & Dumber.

Overall advertising spend in cinema should grow by 3% in 2014, due in part to the more flexible method of selling themedium digitally.

FROM MARCH ADVERTISERS CANTARGET AUDIENCES

BY MOVIE,BY THEATRE &

BY DAY OF WEEK

CINEMA 16


19/24

01BREAKTHROUGH INCINEMA ADVERTISING

02NEW CINEMA APP 03EVENT CINEMA

17

With digital projection now fully installed across allcinemas in Ireland, a new buying method will beunveiled this year. March will see the launch of further digital enhancements allowing cinemaadvertising to be faster, more flexible and morecreative than before.

Digital operation will enable advertisers to submitcopy 24 hours in advance, compared to the threeweek lead time previously. Distribution costs will bereduced and detailed reports on copy scheduling andcopy play-out will be provided. Most significantly,advertisers will have the ability to target audiences bymovie showing, by cinema site and by the day of week. This is a major breakthrough for the medium,making it more accessible and targeted.

IMPLICATIONUp to now, many advertisers have viewed cinema as an

expensive and difficult medium to use, with highproduction costs and long lead times. Many marketersalso felt that cinema advertising was more suited tobrands with big budgets to invest in “movie quality”creative.

The conversion to digital technology means thatproduction costs will be cut by 66% or eliminatedaltogether in ‘production inclusive’ packages. Lead times have been reduced dramatically, making itpossible to book advertising onto cinema screens inless than a week. Advertisers will now be able to target audiences more accurately according todemographics, specific locations and movies.

Also in March, a new mobile app will be launched toprovide cinema audiences with a richer experience in the cinema and lobby area, before and after themovie. With the app, consumers will be able to scanposters in the foyer and receive rewards, plus interactwith advertisements and trailers on the big screen.They will also be encouraged to take part in interactivequizzes to win prizes based on movie-related questions.

The app recognises time, location, image and sound; this helps it to decide what content to send to usersduring the movie, and when to send it. It syncs and triggers content without the need for a 3G or Wi-Ficonnection; users will be asked to switch their phones to silent but leave the app open to interact with thebig screen.

IMPLICATIONThis app will create opportunities for brands to

engage with consumers when they are in the rightenvironment, before and after the film is screened. Advertisers will be able to send offers and content to filmgoers’ phones through messages sent fromposters and the big screen. The app is alreadyavailable in the UK and has been used for promotions by brands such as Ben & Jerry’s icecream and Sony Playstation.

The app will also enable users to unlock brand and film-related content on their phones, opening up thepossibilities for advertisers to send more informationdirectly to consumers for products featured on thebig screen.

Event cinema is where cinemas display a varied rangeof live and recorded entertainment such as sport,opera, musicals and ballets. In the UK the number of cinemas showing these kinds of performances hasrisen from fewer than 100 to 250 over the past threeyears. Advances in digital technology have allowedcinema chains to show these events.

Cinemas owners have realised that the growingdemand for an alternative to blockbuster films canhelp boost profits, especially when the theatre isotherwise unoccupied. This is particularly appealing to cinema owners when they can charge a premium for these events, with average prices ranging frombetween€ 15 to € 25.

In Ireland, cinemas such as IMC Dun Laoghaire andMovies at Dundrum are now offering a range of alternative movie content including live satellitebroadcasts of plays such as War Horse from London’s

West End, and live productions of ballets and operas from around the world.

IMPLICATIONCinema theatres are reinventing themselves asalternative content distributors, and the industry is re-evaluating its business models and practices bothworldwide and in Ireland. In some cinemas in the UK these events can represent up to 10% of ticket sales.

Event cinema has seen the return of older, moreaffluent audiences, opening up new advertising andpromotional opportunities to brands targeting thisdemographic, who would not have consideredcinema in the past.

PRODUCTION COSTSWILL BE CUT BY 66%


CINEMA SPEND ( € M)

66.8 7

3.1

2012 2013

2.7 2.8

ROI NI

2014 (e)


20/24

2013 was a relatively quiet year from a sponsorship perspective, compared with the bumper year in 2012, which benefittedfrom the Euro Championships and the Olympics. However, it was a big year for the GAA, with increased match attendance,grassroots participation, viewership and greater interest owing to Dublin’s success. 2013 saw Dublin finally sign a dealwith AIG Ireland across football and hurling, securing an estimated record€ 4m for a five year commitment. LibertyInsurance also announced a major new partnership, as sponsor of both the GAA Hurling All Ireland Senior Championshipand the Camogie Championships. This is the first time that the same sponsor has supported both of Ireland’s oldest games.

Apart from sports, the other focal point in 2013 was TheGathering. Many new domestic events took place, whichwere warmly received. The Cork Rebel Week in Octobercelebrated all things Cork, while Flight Fest in Septemberwitnessed more than 130,000 people turn out on a blusteryday along the Liffey in Dublin.

With the World Cup, Winter Olympics and Ryder Cuplooming, 2014 is set to be another big year in globalsponsorship. Despite Ireland’s absence from the World Cup,the tournament will create considerable interest. Expect abig summer ahead. Overall, we expect sponsorship spend

to grow by 4% in the Republic and by 1% in Northern Ireland.

Product placement continued to grow in 2013 with some interesting deals penned. Samsung renewed its innovativepartnership with the X Factor, which includes paid-for-placement of Samsung devices within the programme and an off-airlicensing agreement which saw its brand displayed on tickets, in-store units and across The X Factor's website.

2013 also saw record breaking product placement deals worth $170 million secured for the Superman movie ‘Man ofSteel’, the biggest investment of its kind in movie history. Brands including Chrysler, Nokia and Gillette were among almost100 product placements within the movie. This staggering amount of commercial activity recouped three quarters of thecost of making the movie, before it even hit the screens.

Product placement is certainly on the increase with global revenues of $9 billion in 2013, which is 40% greater than 2009,despite the recession in the interim. It is a powerful tool, but there is one significant watch-out to be aware of; when it istoo blatant, forced in, or out of context, it can frustrate and anger consumers.

SIMPLY STICKING YOUR BRAND’S BADGE

ON A SPONSORSHIP, AND LEAVING IT AT

THAT, IS A TRULY WASTED EXERCISE

SPONSORSHIP18


21/24

01CONTENT, CONTENT,CONTENT

02 BROADCASTING RIGHTS; A MIXED UP WORLD

03 COMMERCIALISINGSPONSORSHIP

19

We are witnessing an increase in demand for entertainment content, with the rapid growth of digitalhubs like YouTube, Facebook, Twitter and Tumbler.

Outside of sponsorship, content initiatives swept theboards in global media and advertising awards in2013. Unilever’s Real Beauty Sketches campaign for Dove became the most viral video of all time withnearly 135 million views. Dumb Ways to Die, a railsafety awareness campaign from Australia, wasanother success story, generating over 69 million views.

In the sponsorship arena, Heineken is very familiar withbest-in-class content, particularly around its ChampionsLeague property. A great example comes from Italy in2010; a fake classical music concert was staged at thesame time as a crucial Real Madrid vs. AC Milan game.Guys were convinced by their partners (who were in on the gag) to attend; it was then revealed that the eventwas in fact a live stream of the game with free beer.

This piece generated over 1.1m views. In addition,brands like O2, Red Bull, Nike and Adidas have used their sponsorship platforms to develop amazingcontent which delivers much deeper and memorableconsumer experiences.

IMPLICATIONSponsorship and the rights that surround it, such asaccess to talent and exclusive information, will be inhigh demand in the next few years. Brand owners need to think hard about what elements of the sponsorshipcan be used to create compelling content for consumers that adds real value and enhances interestin the event and the brand.

Broadcasting rights is a growing area of concern for sponsors. 2013 witnessed some major shifts in thecontrol of broadcasting content; Sky’s iron grip on thePremier League was impacted by BT securing 38matches (out of a total of 154) for £246 million per season; that’s a staggering £6.5 million (€ 8m) per match! They also secured the Champions Leagueand Europa League for a further £299 million per annum. As sports organisations come under increasing pressure to fund lavish stadiums andwages, they will increasingly challenge the status quoin terms of broadcasting.

IMPLICATIONThese are major considerations for all sponsors of sport. How devalued is a sponsorship property whenits audience falls due to the rights owner raking in thecash by selling to the highest bidder?

For example, the audience to live Formula 1 coveragein the UK dropped by almost 50% when Sky secured the rights from the BBC. Viewers had been able tosee the races free on BBC, but had to pay £381 tosee ten of the races on Sky. Audiences to the live transmissions fell from an average of 4.2 millionviewers per race in 2011 to 2.2 million in 2012.

This situation is likely to get worse from a sponsor’sperspective. Very careful consideration will need tobe paid to this issue during negotiations with sportsorganisations to ensure that value for money isdelivered in this liquid content world.

Economic conditions have put a strain on allmarketing investment; this is particularly true when itcomes to sponsorship, which can be harder tomeasure in terms of true effect.

Using sponsorship to shift consumer attitudes isworthwhile, but it is more important to make it work hard commercially. In a marketing world with noluxuries, sponsorships have to be flexed to achievehard commercial goals and must be measured usingadvanced analytics to prove their precise impact.

A good example of this in action is the Odlumssponsorship of The Great Irish Bake on TV3, where traditional sponsorship idents were matched withproduct placement within the programme. Thebrand complemented this with in-store visibility anda supermarket promotional tour driving thecommercial agenda.

Further afield, Red Bull has changed the model bybuying sports teams rather than just sponsoring them.They dominate Formula 1, they own FC Red BullSalzburg, they own the New York Red Bulls and theyare now rumoured to be interested in the Premier League in England. This type of control allows for fullcommercial flex of these properties, from name, tostadium, jersey sales and beyond. It does, however,come with its risks!

IMPLICATIONRecognising the brand fit for a sponsorship is only oneaspect. Increasingly, brand owners need to identify the commercial opportunities sponsorships can

present. What are the business synergies as well as the brand synergies, and what elements of thesponsorship can help achieve business growth in theshort-term?

BT PAID€ 8 MILLION PER MATCH TOBROADCAST THE PREMIER LEAGU


SPONSORSHIP SPEND ( € M)

118.3 119.1 123.6

13.2

2012 2013 2014 (e)

13.3 13.4

ROI NI


22/24

The digital evolution within mainstream media is helping brands reach their intended audiences with minimum wastage.Direct marketing is also improving its targeting of specific audiences and facilitating relevant communication in a morepersonal way than regular advertising.

Consider the loyalty cards you may have… the permission based emails you may have signed up to… the brochuresthat have been mailed to you. Ask yourself whether your interaction with brands through these channels is morepersonal than your interaction with brand messages received via mainstream media. Of course it is, but only when it’sdone properly.

Personalisation, relevance and strong creative are of vital importance to maximisethe impact of direct marketing. CRM or direct marketing programmes work bestwhen each channel is used for specific objectives; e.g., mail for important,special, high value occasions; apps to surprise and delight; e-mail for consistentconversations and competitions.

Services such as An Post’s Admailer.ie allow us to target a defined area withlow cost direct mail messages. This has clearly strengthened direct mail as acost-efficient and minimum waste medium for marketers. The effectivenessand appeal of direct mail will be further strengthened with the advent of the

new postcode system, which will be completed in the Republic of Ireland by March 2015. Although we will be the lastcountry in Western Europe to introduce a postcode system, we will be the first in the world to have an individual sevencharacter code which will identify every property in the state, ensuring channels such as direct mail and door-to-door aremore relevant and efficient.

As a result, Irish businesses will be in a position to build stronger databases and accurately target specific homes andbusinesses. To date, targeting rural areas via direct mail has been problematic as many addresses are not unique; in fact asmuch as 40% of addresses in the Republic suffer from this problem. The introduction of the postcode system will overcomethis issue for marketers.

The total spend on all direct marketing activity is not measured in Ireland, but we estimate the investment on direct mailto be € 119 million in the Republic of Ireland; no figures are available for Northern Ireland.

GOOD DATAMANAGEMENTCAN IMPROVEDM RESULTS

BY 30%

DIRECTMARKETING

20


23/24

01DIRECT MAIL VS E-MAIL

02RELEVANCE TO THEUNDER 30S

03DATA ISEVERYTHING

21

Direct mail’s perceived relevance has suffered a bit inrecent years, given the exciting developments in digitalmedia. This is demonstrated in the chart below whichshows the disconnect between how marketers viewed themedium in the past, versus the consumer’s experience.However, this perception is quickly changing.

The reduction in the volume of post plus the increasein the use (and abuse) of e-mail has resulted in thestrengthening (and recognition) of direct mail as aneffective marketing tool. Research conducted by Amárach in 2013 highlights the considerableadvantage enjoyed by direct mail.

48% of Irish adults agree that no channel makes them feel more valued than direct mail compared to 29%in favour of e-mail

70% of Irish adults prefer to receive loyalty rewards in the post versus 31% who prefer to receive loyaltyrewards by e-mail

Direct mail also delivers on an experiential level; it has the potential to deliver more impact than many other media, as the customer may choose to receivesamples, thereby potentially getting the opportunity to touch, smell or use your product.

IMPLICATIONThe large amount of e-mail spam we receive hascreated a lack of trust. Without proper targeting,electronic DM can be viewed as cheap, irrelevant andintrusive. In the future we will see marketers being lessreliant on e-mail. Instead, an increasing amount of

direct marketing campaigns will use addressed mail to drive action and help to deliver trust in a brand.

It is well accepted that media consumption patternshave shifted rapidly as a result of digital opportunitiesand related new media channels. This is particularly true when targeting young adults.

In analysing opportunities to connect with younger audiences, too often the focus is on the impact of emerging media. The evolution of new media hasalso had an impact on how audiences interact withmore established media. This is not always anegative thing and in certain instances, establishedchannels are strengthening their impact. One suchmedium, which has a very different relationship withyounger audiences, is direct mail. Further results from the Amárach study prove this:

65% of 18 to 25 year olds say they are excited when they receive post

47% of 18 to 25 year olds agree that direct mailmakes them feel like a valued customer

IMPLICATIONMail is a new medium for the under 30s. This mayappear to be a strange statement when referring to amedium which is 300 years old, but younger Irishadults do not receive much through the post and theylook forward to receiving personalised direct mail.Target them with a relevant message and you willprofit from it.

Effective direct mail requires strong creative,personalisation and good data. Direct marketing hasmoved away from the ‘spray and pray’ approach.Targeting and accountability are key to success; and for the DM industry they are key to survival and future growth.

Proper data management will ensure that targeteddirect marketing has more relevance and minimumwastage. Proper use of databases will help toeliminate junk communication, thereby strengtheningdirect marketing’s effectiveness.

More specifically, location data from smartphonesand other mobile devices will supply valuableadditional data on customers’ buying habits.

IMPLICATIONBrands will continue to become more rigorous with their segmentation by focusing on high-valuecustomers and treating them differently. Marketersneed to continue to mine the data at their disposal toensure they segment and understand their targetsmore effectively. It may be stating the obvious butproper data management and target profiling resultsin improved response rates. A good example of thiscomes from mail order firm Boden, who produced aclothing catalogue featuring a fold-out spread thatwas unique to each customer. This data–driveninitiative increased response rates by 30%.

Technological evolution (including smartphones)combined with evolving social channels are offeringmarketers the opportunity to build invaluable

databases on customers and their shopping habits.Direct Marketing reward schemes and loyaltyschemes will become increasingly relevant as a result.

65% OF YOUNG ADULTS ARE EXCITEWHEN THEY RECEIVE POST

54%

What marketersthink is effective

What 18-25’sthink is effective

Email DirectMail

Email DirectMail

24%32%

47%

Source: Amárach Research 2013


24/24

FOR MORE INFORMATION PLEASE CONTACT:

ALAN COX

TEL: +353 1 649 6458

WEB: WWW.COREMEDIA.IE

EMAIL: [email protected]

Documents

Core Media Outlook 2014