Tag Archives: 2010

TV Challenges for 2010

What lies ahead for NZ television networks in 2010?

More of the same, with occasional disruptions and a few hints of trouble yet to come. 

The disruptions? Unprecedented four-channel coverage of the Winter Olympics in February; the FIFA World Cup in June; and the Commonwealth Games in October – all likely to dislodge viewing habits.

Outside those times, it’s business as usual for the free-to-air networks. ONE, TV2 and TV3 are all expected to field schedules largely similar to their 2007-08-09 seasons, with many returning favourites. But we won’t be seeing TVNZ local productions Dancing With The Stars or Wheel of Fortune in 2010 – too expensive in the expected economic climate – and rumours persist of potential cuts to the TV3 schedule when the new Australian boss Ian Audsley (AKA “hatchet man”, according to media reports) takes over early in 2010.

And, of course, 2010 ushers in the last season of Lost. Whatever will we do without its metaphysical musings and maddening meanderings?

According to a new Knowledge Networks report, 56% of U.S. television viewers usually turn on their TVs without the intent to watch a specific programme. In other words, for most U.S. viewers, Appointment Viewing is so last decade.

We don’t expect Kiwi audiences to change their ways too soon (there’s always Coro Street firmly on the schedule), but it’s an amber indicator of times to come …

Economic Recovery: Are We There Yet?


“Media owners have provided a great deal of additional value during the past six to nine months but we’re now entering a more ‘normalised’ environment. So trading will have to return to contracted levels.” TVNZ Head of Sales Dave Walker, quoted in Planit (14 October 2009)

MediaWorks CEO Brent Impey was similarly bullish at the TV3/C4 New Season launch, reporting that business has really picked up over the last eight weeks; and more money has been booked on television with MediaWorks in the last seven days than ever before in its history.

So — back to business as usual then, at least for television?

Alas, if only it were that simple. As we’ve learned from past “economic corrections”, the fourth quarter of each year is always a time of hope, when those marketers who have held back during the earlier part of the year spend what pennies they can scrape together, hoping for at least some Christmas sales to offset what’s been for most an annus horribilis.

Much as we’d like to believe that those “green shoots” of economic recovery spotted by optimistic observers will blossom forth and bear sumptuous harvest (if we may be forgiven for threshing the metaphor) — we fear that this new growth spurt won’t last past Boxing Day.

We’re not just being cantankerous. Despite the well-documented restoration of consumer and even business confidence, in our opinion it’s only skin-deep; the underlying realities suggest a slow recovery. As Reserve Bank Governor Alan Bollard observed recently, “we expect the economy to begin growing again toward the end of [2009], but the recovery is likely to be slow and drawn out. It could also be erratic. To many households it may not feel like a recovery at all, with lower employment, house prices and wage increases into next year.”

Businesses will be starting to plan now (or soon) for 2010/11 financial years starting in April or July 2010. Based on current trading conditions, company finance directors are unlikely to approve significant marketing budget increases for next year — green  shoots may look pretty in the garden but they don’t stand up too well under the harsh spotlights of the boardroom.

As a result, we don’t expect marketing budgets to show much improvement until 2011. Consumers and businesses may well be telling researchers that they expect conditions to improve over the next twelve months — but that’s largely expressing an expectation that things won’t get any worse, not that they’ll suddenly turn absolutely fabulous.

Even Christmas 2009 may not provide the boost that business is anticipating. The latest Kiwi consumer credit figures (to August 31) show a 4.6% slump in borrowing; and Kiwis are saving just 0.2% more than they were twelve months ago. Philip Borkin, economist at ANZ National Bank, summed up the challenge we all face: “A lot of people are paying down debt, and until we see the credit numbers improve, we’re not expecting much to change. For retailers this is a critical time – if we don’t get a pick-up then this could be a very challenging time for them.”

Economists’ cautions are supported by other indicators. Jasons Travel Media recently asked Kiwis what they’re planning to do for the Christmas and summer holidays. A staggering 60% of respondents are changing their plans from the norm this summer – opting to spend their time somewhere other than where they have gone for summer holidays in the past. When asked, there were a plethora of reasons for the break from traditional plans including ‘better deals on accommodation elsewhere’, ‘decided to go somewhere close’ and ‘money is a bit tight this year’. In those Clintonesque words, “It’s the economy, stupid”.

It’s not just us, of course. The latest news from the land of (former?) Hope and (lost?) Glory suggests that parsimony rather than plenty is a global reality these holidays.

The just-published Holiday Forecast Consumer Behaviour Report from PriceGrabber.com finds that this holiday season American consumers will NOT be buying Christmas goodies for:

  • Acquaintances, 57%
  • Co-workers, 53%
  • Service providers (eg parking attendant, housekeeper), 44%
  • Extended family (sorry auntie), 42%
  • Friends, 31%

Other Holiday Trends from the PriceGrabber.com survey of 2,018 online consumers, conducted from Sept. 24, 2009 to Oct. 12, 2009:

Consumers are more price-sensitive than ever
More than ever, comparison shopping is on the forefront of consumers’ minds, with 70 percent of consumers doing more research and comparison shopping online, compared with 38 percent last year. And fifty percent of consumers are planning to shop at discount or outlet stores this year, while only 43 percent did so last year.

Consumers are cutting back
Fifty-three percent of consumers are planning to spend less than they did last year. Of the consumers who are planning to spend less this Christmas, 48 percent reveal that one of the reasons that they are spending less is due to an increase in prices (necessities, gas, etc.), 45 percent cite lack of confidence in the economy, and 38 percent indicate making less money as a reason for spending less.

Shopping has started earlier, to ease the impact of holiday spending
In past years, Black Friday (the day after Thanksgiving, late in November) has been the unofficial start of the American holiday shopping season. This year, US consumers are planning to start their holiday shopping long before Black Friday, with 22 percent of consumers starting their holiday shopping in October and 29 percent starting in November.

In New Zealand, retailers have been in Christmas shopping mode for some time. The ubiquitous Cameron Brewer, chief executive of the Newmarket Business Association, warned in late September that “for better or worse consumers can expect to see Christmas decorations and displays popping up in some New Zealand shops over the next few weeks.”

Kiwis usually do their shopping somewhat ahead of the Christmas rush anyway. A 2007 study by AMP Capital Shopping Centres found that:

  • 25% of Kiwis have begun their Christmas shopping by September 25, three months out from Christmas
  • 16% start shopping in October
  • 21% hit the malls in November
  • 33% wait until the last fortnight before Christmas
  • 7% of us (three-quarters male, inevitably) leave Christmas shopping until the last minute
  • Meanwhile an impossibly virtuous 3% head to the Boxing Day sales with vim and vigour, buying their gifts for the following year 364 days early.

Gift lists are trimmed down to manage budgets
When it comes to holiday spending this year, 36 percent of US consumers expect to spend between $100 and $499, 28 percent plan to spend $500 to $999, and 30 percent anticipate a holiday spend of $1,000 or more.

We don’t have any recent NZ data for Christmas spend levels, but a five-year-old study by UMR Research on behalf of Visa International found that:

  • More than 50% of Kiwis expected to spend less than $300 on Christmas gifts
  • 16 percent intended to spend less than $100
  • One in twenty said they were planning to “splash out” and spend more than $1000
  • Credit card holders were more likely to expect to spend over $500 than non-cardholders (22 percent compared with 12 percent)
  • Men generally planned to spend slightly more than women
  • The most profligate age group was 30-44 year-olds.

Add a few dollars for five years of moderate inflation, deduct as required for economic downturn du jour, season to taste.

THAT’S THE CONSUMER, WHAT ABOUT BUSINESS?

The biggest declines in Year On Year reported advertising expenditure (according to Nielsen Media Research data, Jan-Aug 2009 vs Jan-Aug 2008, at ratecard values) are:

  • Automotive (down $20.1 million)
  • Investment/Finance/Banking (down $17.8 million)
  • Government (down $11.8 million)
  • Home Improvements (down $7.7 million)

In terms of individual advertisers, Telecom has had the biggest drop in reported spend, down by 32% ($10.7 million) YOY. 16 of the top 20 advertisers would seem to have recorded YOY expenditure increases, but we suspect this has more to do with better deals being negotiated in recessionary times rather than extra dollars squeezed out of corporate coffers.

Are we likely to see any of those lost ad dollars return in 2010?
We don’t expect the Financial sector to dip into its battered piggy banks in the near future. As we’ve already seen, consumer borrowing remains down as we pay off our debts (just in case). The housing boom is over so we won’t be desperately seeking mortgages every six months; and our memories of the financial sector meltdown are all too fresh, so the non-bank financial intermediaries are rather less likely to advertise just now.

The Government? Officially on a fiscal diet. We’ll see a splurge of local body activity in Local Election Year 2010, especially as the SuperCity emerges from its chrysalis, but that doesn’t usually translate into big dollars.

Automotive? Well, you know what’s been happening offshore. Within New Zealand, if we look at how many Kiwis say they’ll be buying a new car within the next six months, that number’s dropped from 41,000 in July 2008 to 24,000 in July 2009 (Roy Morgan Single Source data).

Home Improvements? According to Roy Morgan Single Source, 706,000 Kiwis say they plan to refurbish or redecorate their home in some way (such as replacing curtains, carpet or wallpaper) in the next year — well down from 830,000 twelve months ago. And just 367,000 (was 460,000) are planning to spend more than $5,000 renovating or extending their homes in the next twelve months. With fewer consumers willing to pimp their homes, competition’s going to be fiercer than ever for the Home Improvement dollar.

THE MULTINATIONAL EFFECT

As a small country far out in the uncharted backwaters of the unfashionable end of the Western Spiral arm of the Galaxy, New Zealand is at the mercy of global forces in a number of ways, not least the dark and mysterious menace known as the multinational balance sheet. As each quarterly reporting deadline looms in the financial capitals of the world, global CFOs swoop on allocated but unspent marketing budgets from the tiny, farflung outposts of their empires in a futile botoxian effort to tart up the numbers.

Given the current economic woes in most of the countries to which our multinational branches report, local marketing budgets won’t be doing anything but shrinking in most 2009/10 financial years — which takes us to October or November 2010 (based on typical multinational financial years) before any fiscal relief is even theoretically possible.

In other words, multinational marketers (the biggest spenders in our mass media) won’t be driving any Kiwi advertising recovery any time soon. Don’t batten down the ratecard just yet.

MEDIA FORECASTS FROM ELSEWHERE

Our global counterparts aren’t expecting much from 2010. World Advertising Research Centre (WARC) media inflation forecasts for the year ahead (just released) don’t inspire much optimism unless you live in the emerging economies of China, India or Russia. Projections for media inflation (2010 vs 2010) for three of our key indicator markets:

Australia:

  • Television up 1.6%
  • Newspapers up 0.6%
  • Magazines no change
  • Radio up 0.5%
  • Cinema up 0.8%
  • Out of home up 1.1%
  • Internet up 5.5%

United Kingdom:

  • Television down 3.3%
  • Newspapers down 0.6%
  • Magazines down 2.4%
  • Radio down 2.0%
  • Cinema down 0.5%
  • Out of home down 0.8%
  • Internet down 5.8%

USA:

  • Television down 5.0%
  • Newspapers down 4.5%
  • Magazines up 1.0%
  • Radio down 5.0%
  • Cinema up 2.0%
  • Out of home down 1.0%
  • Internet up 0.5%

Not much there to encourage embattled media owners.

SO ARE WE THERE YET?

We’ve seen the feathers, we’ve heard the tweets, but so far no actual sighting of the first cuckoo of a new economic spring. Our consensus view at this point is for a seasonal uptick till Christmas, then slow simmering during 2010. Sorry.

This article is drawn from our presentation MEDIA 2010: A Sneak Peak At What Lies Ahead. If you’re a Media Counsel client, please talk to your TMC team about scheduling a time for us to present MEDIA 2010 to you and your colleagues.

Marketing Manifesto October 2009

In the latest issue of our Marketing Manifesto enewsletter, out now:

  • Economic Recovery: Are We There Yet?
    We look at current NZ economic conditions and review the marketing prospects for 2010
  • Television 2010: First Look
    What’s coming up on TV over the next 12 months (including details of new season shows on TV3 and C4)
  • Google: Yellow Peril?
    All about Local Listing Ads and the dangers they pose for our own Yellow
  • Gone in 2.3 Seconds
    New in-store marketing research revealed
  • Game-Changing
    All about Disney’s new paradigm-shifting technology offering
  • Coming Attractions
    Highlights of forthcoming movies

If you’d like a free copy of our newsletter, just email us at newsletter@mediacounsel.co.nz

Getting revved up for 2010

Does this sound familiar?

“Asked to outline the most significant challenges facing them in their role as marketing manager the most frequently mentioned included:

  • Forecasting the economic trend due to the global economic downturn;
  • Retention/growth of market share or to increase sales;
  • Competition and the ability to differentiate products or services from competitors;
  • Retention of marketing budgets/funding;
  • Devising new market strategies to increase sales/market share;
  • Achieving targets with the fluctuating currency and impact on interest rates and imports/exports.”

That’s what 100 Australian senior marketers indicated when asked for their views on the year ahead, in a survey conducted in November 2001 by ACA Research.

We suspect the answers would have been largely the same in 1991 or even in 1971. They remain as relevant as ever today.

Are YOU ready for a prosperous but tough 2010?

Take an hour out of your day today, and spend 10 minutes on each of the six challenges that have the Australians so worried:

  1. What impact is the global meltdown already having on your business? What new strategies can you put in place to reduce its impact? With which non-competing companies can you team up, to reverse the trend?
  2. List 10 actions you can take to retain or improve your market share. Implement the first action TODAY, and commit to one new action every week. Add a note in your diary to review those actions every 3 weeks.
  3. If this was “Survivor:Business”, would your company be voted off first? Could your clients, blindfolded, tell the difference between your products/services and those of your competitors? Could you? You have 60 days to fix that, as of NOW. Start by reading “Differentiate or Die” by Jack Trout and Steve Rivkin – from your library or bookstore or online.
  4. Must your marketing budgets be approved by others? Then get ready to protect those budgets, even if it takes a slambang, no-holds-barred, WWF-sanctioned battle royale. Do whatever it takes to hold the line.
  5. The old sales channels are off-limits. Find new ones. Be inventive, be creative, be off-the-wall, be cranky.  Never sold widgets through gas stations? Now you must. Ten minutes to new markets.
  6. Guess what? Economic turmoil is here to stay. Deal with it. Six solutions before lunch.

Feeling a bit more ready for 2010 now? Then do the same exercise next week.