The Audit Bureau of the Future – IFABC 5 November 2014
Script – Carolyn Morgan
1: Title slide
I’m delighted to be presenting to you all today. I’d like to say thank you to Jerry Wright for asking me to update the report on the “Audit Bureau of the Future” that I presented to the IFABC General Assembly in Madrid two years ago. Since April this year I have been reviewing published stats on global trends in media and advertising. I have also conducted an online “change census” among 23 audit bureaux, plus interviewed 10 European bureaux face to face in Zagreb at the IFABC Europe conference and Tom Drouillard, new head of AAM in the US over the phone. In addition I have interviewed by phone 10 senior agency executives and advertiser marketing executives to understand the buyers view.
2: Content slide
This presentation covers the main findings and opportunities for Media Audit Bureaux to develop in future. In addition there is a 120+ slide report available to all of you to refer back to. And a short exec summary, which you are welcome to share with your respective boards.
So today I am going to cover:
- current trends in media consumption worldwide
- the buyers view from the interviews with agencies & advertisers
- what we see as the “7 steps” to the media audit bureau of the future
We are going to have a break for Q&A after the first two sections which Jerry will moderate, and then we have more time scheduled after the last section.
[check] There’s a page where you can submit questions by typing during the presentation, and then I can answer them when we break for Q&A.
3: “Mobile driving internet…”
There are clear regional variations in how internet access is changing. In Europe & North America fixed internet access is widespread, typically over 50%, but mobile is moving more rapidly with >75% penetration. In the purple regions: Asia, Lat Am, North Africa, South Africa, mobile is already over 75%, even where fixed access is less than 50%.
Forecasts now project that 80% of literate adults worldwide will have mobile internet access by 2017.
Tablets will replace PCs, but smartphones will drive growth: by 2017 that means 3.5 bn smartphones and 1 billion tablets. Large screen size phones are blurring the boundaries.
4: “Mobile devices are changing consumer behaviour”
This explosion of mobile devices is changing how people consume content and how they shop, and these trends are seen everywhere. The phone or tablet is becoming the default device for web browsing whether at home or travelling. Mobiles are used to multi-task – check emails or contact friends – while watching TV. Or even to watch entire TV programmes. Mobile is an important daily news source, especially given the growth of social media as a referral source for news stories.
5: “Fastest mobile web growth in Asia…”
This chart shows just how much mobile web access has grown just in the last year. Globally it has grown from 14% to 25%. The pattern is widespread but it’s particularly dramatic in Asia and Africa.
6: “Time spent daily on digital video…”
In the last two years the time spent watching digital video has doubled for most age groups, with <34s now watching on average 35 minutes of digital video a day. The interviews I carried out with agencies and advertisers show that in some regions this trend is even more marked. Cynthia Evans of GroupM said that in LatAm digital video was around a third of total viewing. And David Porter of Unilever in Shanghai said that affluent young Chinese will happily watch an entire programme on a smartphone. I’ve also seen stats that back up that owners of larger format phones spend more time watching digital video. Plus inevitably the extra time that mobile media consume is at the expense of print, radio & TV.
7: “mobile commerce growing steadily…”
These stats from Global Web Index show the growth of mobile e-commerce. This was a particular trend noted by Gary Lim of Johnson & Johnson in Singapore and David Porter in Shanghai.
8. “Print publishers now embracing digital channels…”
So how is this affecting traditional publishers, core customers for many audit bureaux?
Most now accept print is in long term decline; and certainly news brands are finding online is expanding their audience, and advertising is expanding. Mobile digital edition revenues are growing, albeit from a low base. B2B media are making a more rapid transition to digital subscriptions, as the decline in print recruitment advertising undermines the profitability of print. New digital revenues are growing, but barely replacing print losses, especially in North America and Western Europe. And pureplay entrants are taking share.
9. “Magazine publishers grow digital rev to replace print…”
So this slide based on PwC analysis shows how digital revenue (the top section) is growing as print revenue declines. Interestingly, publishers are having more success in digital advertising than circulation, and B2B publishers are making the transition more rapidly than B2C.
10. “Pure play digital news media becoming a threat”
But traditional print media need to watch out for digital pure plays. This analysis by the Reuters Institute asked readers in different countries which news brands they had used as a source of news in the last week. The pale blue column on the right hand side is the pureplays – so you can see in the US they are neck and neck with traditional media. In the UK established news brands are still ahead, but the likes of Buzzfeed, HuffPost are growing internationally, so this could change in the next couple of years.
11. “Mobile will drive digital ad spend, squeezing print”
Moving onto advertising spend, these statistics from Zenith Optimedia show that, if anything, the switch from print to digital is moving more rapidly than we forecast 2 years ago. Internet advertising will expand from just over 20% to almost 27% of total ad spend by 2016, driven by a dramatic expansion of mobile advertising to 7.7%, bigger than magazines or outdoor. While TV pretty much holds its own, print is the big loser, shrinking from 25% of total spend to just over 20% by 2016.
12. Programmatic advertising accelerating worldwide
The stand out trend in digital advertising is the growth of programmatic, allowing agencies to buy an audience automatically across multiple websites. This is really taking hold in the US, where agencies appreciate the lower costs, but clients are increasingly concerned about the lack of transparency and the risks of ads appearing in inappropriate contexts, of which more later. Programmatic is becoming more widespread in Western European markets, but as yet is relatively small in China.
13. Global media market trends: the view from 2014
There’s much more detail in the full report; which you can all review in detail later, but here are the top-line trends.
Mobile growth is powering internet access worldwide. This is driving change in consumer behaviour: the most important trends being multi-screen usage, digital video viewing and m-commerce.
Traditional publishers are almost replacing print revenues with digital -- but the “digital native” media are gaining ground with consumers.
Ad spend is shifting to digital mobile, with print declining even faster than we projected two years ago, and digital video eroding the share of broadcast TV.
14. Title: The buyers view
So now let’s take a look at the buyers view, based on my interviews with global advertiser and agency heads
15. Buyers view (list)
Here’s a list of the people I interviewed: most had global or pan-regional remits. It’s a mix of different agency groups and major advertisers including GSJ, Johnson & Johnson and Unilever.
16. Buyers view: main trends in media landscape
First we asked for their take on the main media trends, and these largely coincided with what we were seeing from published stats. In LatAm and Asia, if anything the trend to digital screens and video content was more pronounced, as the adoption of mobile devices provided a new way to reach consumers using the impact of video-based ads but not traditional broadcast TV. Thus for major advertisers, digital video and multi-screen is now the core of campaign planning.
The continued expansion of digital advertising, and programmatic was a key trend, and this, with the emergence of mobile digital video, led to the view that print is now marginal, especially in China and LatAm.
Buyers also have an eye on the emergence of social advertising and m-commerce among younger affluent consumers.
17: Buyers view: campaign planning, buying, evaluation
Planning is holistic: with clients considering paid, owned and earned media across all platforms at once. There’s much greater focus on outcomes in planning: ie volumes, audience, changes in attitude, enquiries and sales.
Large clients and major digital media are planned at global level; some campaigns are planned at pan-regional level, but then are often adapted for each country, and in the case of China, at city by city level.
Video is now a core part of the plan: Unilever in China plans video first, then sponsorship/ content second. Standard display, print and OOH follow later.
Many brands have highly detailed audience targets, and get frustrated when they can’t buy at a targeted level – as trading currencies are based on broad audiences.
As far as buying is concerned, agencies still have specialists for each medium, but based within a single buying team. There’s a big skills gap in programmatic buying – although the largest agencies have invested heavily.
Evaluation of campaigns is now even more sophisticated. Clients have sophisticated models for evaluating paid, owned and earned media, built in partnership with agencies and incorporating client data on target outcomes.
The growth of digital means more emphasis on real-time marketing as campaigns can be reviewed against client outcomes and adjusted in-flight.
18: Buyers view: ad risks and measurement issues
The rapid growth of digital advertising is drawing attention to new risks in advertising:
Was the ad seen by the target audience and for how long?
Was the ad shown in an inappropriate context?
Was the ad seen by people or computers?
In less well regulated markets, buyers are concerned about online fraud and lack of transparency in measurement.
With the growing reliance on data, there are concerns that algorithms connecting disparate data sources could be flawed.
And the growth of social media as part of campaigns carries the risk of a consumer backlash.
Measurement hasn’t kept up with the changes in how campaigns are planned.
Buyers want to track one customer across multiple platforms, but have to aggregate different measures and still rely on intuition to fill the analytical gaps. Ideal would be to be able to measure relative effectiveness of different media
Comparing research data cross border is still harder than it should be.
Viewability is a concern: has the consumer seen the ad? And can we adjust costs if they have not?
Buyers perception is that existing currencies are slow to adapt due to vested interests on boards, and that it’s the outsiders who are innovating.
Multiple media JICs are too costly: they need to merge.
19: Opportunities for audit bureaux
Buyers have suggestions for new products and services that audit bureaux could develop, based around the risks and issues they face.
Measuring the cross media audience: interest in independent media brand certificates and also audits of media owner cross-platform data.
Making cross border comparisons: working with the industry to establish global standards
Digital ad risks: including viewability, brand safety and online fraud: developing ways to certify tech vendors claiming to mitigate these risks and promoting transparency in digital advertising.
Emerging media: video, mobile, social & ecommerce – create an opportunity to develop new metrics and standards – and ultimately to track consumers from media to purchase.
These suggestions are constrained by perceptions of audit bureaux strengths and how their skills complement other measurement bodies. There was support for the independence of audit bureau and their ability to bring the industry together to build consensus. However there is a view that industry bodies are slow to change, blocked by vested interests and the multi media JIC structure is too costly. So bureaux would be supported in plans to rationalize JICs and renew board members.
20: Q&A
We’ll take a break here and there’s an opportunity to ask some questions on the media trends and the buyers view sections. You can submit a question online, or ask it now and Jerry will moderate the Q&A.
21: Media Audit Bureau of the Future
This section looks at what changes audit bureau around the world are making to their products & services, and how they are innovating. It sets out 7 steps that every IFABC member can take to innovate in their local media market.
22: Audit bureaux view: media trends past and future
As part of the online Change Census, we asked bureau for the main changes taking placed in their markets, and the themes were in line with what we have heard from the buyers. Many of the 23 bureaux that took part have also observed consolidation of publishers in their local market.