After a tough couple of years the media sector was looking forward to a bright 2012. But a number of factors led to the market's advertising revenue to shrink slightly. Jessica Kennedy finds out what happened and discovers a resilient market that's pushing ahead
A threatening dark cloud shrouded New Zealand as it struggled through the GFC and the devastating Christchurch quakes.
But now, the 'land of the long white cloud' is set to bask in the colours of a rainbow.
The recent decision to legalise gay marriage has not only put NZ on the map as a place of progressive politics, but the move is also poised to pay economic dividends.
Rodney Croome, Australian Marriage Equality national director, has said same-sex marriage could provide a $700m boost to the local economy, but now, much of that will be spent across the ditch.
Where gay marriage has been legalised a rush of money has followed, including in New York which received a $259m boost in its first year following the decision.
The prospects could be a positive sign for the media landscape after the country's advertising revenue hit reverse in 2012.
The New Zealand Advertising Standards Authority (ASA) found ad revenue across all main-media was NZ$2.164bn for the 12 months ended December 31, slightly down on the 2011 total of NZ$2.179bn.
"Whilst we seem to have weathered most of the global storms, it has left a residual air of conservatism amongst advertisers that showed in the slight market contraction in 2012," explains Laura Maxwell-Hansen, general manager of Yahoo!NZ and Chairperson at IAB NZ.
When we spoke to agency and media heads last year the outlook was "tentative but positive", Jeremy O'Brien, head of sales at TVNZ, explains the gap between expectations and reality: "A whole lot of things in NZ didn't kick in that were only projected in the start of the calendar year. Things like the Christchurch rebuild, that has hit slower than expected. So that deferred spend a little bit.
"There is still continuing reliance in this market on what's happening out of the Australian market. FMCG is significantly down out of that market, a lot of Trans Tasman planning and buying means that has had a bit of an impact."
Over the past year and into this year the media has endured a great deal of change. TVNZ has a new chief executive after Paul Maher moved to competitor MediaWorks, with shuffles also occurring at APN and Fairfax (see Print section).
"There is a huge amount of change going on which I believe shows the pressure within the industry," says O'Brien.
There remains a mix between clients who are willing to lay down long-term plans and those that are more responsive. While tactical campaigns will always be prevalent in conservative markets, Maxwell-Hansen believes a change is afoot. "They're easy to sell to the CEO and deliver quick results to fill budget shortfalls. However if everyone is doing it, then it's a race to the bottom and the only winner is the consumer," she says.
"That was a lot of what happened in 2012 and now we are definitely seeing a move back into brand-building campaigns across all media."
Media Health Check
As 2013 rolls on, we check in with the different media forms, take their temperatures and see how they are feeling about the coming seven months.
2013 is the year of big TV in NZ with MediaWorks launching The X Factor NZ, the "most expensive locally produced programme in New Zealand television history", says Liz Fraser, director of sales and marketing at MediaWorks TV.
"The dedication and passion that has gone into making this programme a success, including the input of our integrated sponsor partners, is outstanding."
Following X Factor will be The Block NZ series two. "Last year, The Block increased performance against all people 25-54 in its timeslot by 127% and lifted TV3's average peak ratings by 13%. It was a phenomenal success which Kiwis will devour once again this year."
Over at TVNZ, the programming highlights include MasterChef NZ (which delivered its largest debut audience yet of 1.1 million in February) and DIY show Mitre 10 Dream Home which is rebuilding homes in Christchurch.
The networks' investment in local this year is significant because, as TVNZ's O'Brien, explains the monetisable audience in NZ (around 4.5 million people) compared to the cost of production is expensive.
"When we do invest in local we have got to get it right. Our local production community has a really good track record of getting it right but there are some economies that we have to balance so for us it is about focusing the on the big hit opportunities."
In the past, a number of those big hits for TVNZ have come from its international deals with Warner and Disney (the network also has relationships with Sony Movies and ITV). But once the global recession hit the number of pilots being made reduced, "less going in the top of the funnel, less chance for hits at the bottom end of the funnel," O'Brien adds. "For the first time in a while we are seeing more pilots being made¬so we are due another big hit out of our international supply contracts."
Beyond programming, how do the networks plan to reclaim the $4m that was cut from TV's advertising revenue in 2012 and grow its share of NZ's ad turnover which stayed steady on 28%?
Fraser says MediaWorks' ability to offer integrated solutions across its TV, Radio, Online and mobile assets is boosting the network's coffers. "Our biggest challenge is keeping up with the demand for integrated concepts."
TVNZ's vision is to 'engage the hearts and minds of NZ'ers with the most watched content' but this promise expands beyond the TV set with TVNZ investing heavily in online video content.
TVNZ's on-demand video service is currently available across Playstation3, PC, Samsung SmartTV's and Apple iOS with Samsung Android apps to launch this month. So far, the business is averaging three million video streams a month. "We are investing there hard now because we think that will be a seven to 10 million video streams a month business in the next 12, 18 or 24 months and we want to be at scale first." Key areas of growth for TVNZ are, like MediaWorks', in integrated media solutions but also in branded content.
This time last year the outdoor-industry had just commandeered a 3.8% share of the NZ ad market, adding $13m to its 2010 figure to reach $83m.
As a result the medium predicted a "buoyant" year for out-of-home (OOH) in 2012. Unfortunately however expectations were not met with ASA figures revealing OOH's advertising revenue dropped $16m YOY to take a reduced 3.1% share of the market's total ad turnover. Jo Davenport, marketing and communications manager Outdoor Media Association of New Zealand (OMANZ), says the fall was not surprising given the growth the industry enjoyed due to the Rugby World Cup in 2011 and the "challenging economic times".
"2013 however has started strongly with a 16% increase for Q1 revenues vs the same period a year ago. Key consumer macro and media trends support a more positive future and a continued growth of the OOH industry, and this is consistent with trends from global markets," she says.
The industry has also seen some change with oOh!Media re-branding all the Eye Corp assets it purchased from Network Ten late last year, with staffing changes and plans to roll out new digital formats.
A lot of noise is made about the destructive powers of 'new media' on the old or traditional, but Davenport believes outdoor will hold its own. "OOH is more relevant than ever as consumers' media habits continue to fragment," she says. "Consumer changes in their media consumption habits impact OOH less, because at the end of the day, people still need to 'step outside' to participate in everyday life."
OMANZ hasn't lost sight of its goal to claim 5% of NZ's total ad revenue, a feat Davenport says is "achievable over time".
The radio industry started 2013 with a bounce in its waves, after ASA figures revealed the medium had increased its share of NZ's advertising revenue from $247m to $248 in 2012. Adding to this is the first radio survey of 2013 which showed a slight increase in the number of listeners to radio (now 78.3% for those aged over 10+ compared to 77.2% in the previous survey) and to time spent listening, which increased 55 minutes to just over 18 hours per week.
The NZ market currently has two radio surveys per year but this is subject to change, as Gill Stewart, general manager of The Radio Bureau explains the industry has recently conducted a survey tender and shortlisted two companies to trial new methodologies. The successful tenderer will be in place from 2014.
"The trail will include both on-line and smart phones and at least one of these is likely to be added to the traditional paper diary method by 1/2014," Stewart adds. "As part of the tender the industry is also considering rolling surveys with an increased number of releases."
Radio networks in Australia wasted no time in launching their own streaming services as big players such as Spotify, Pandora and others entered the market. Katie Mills, group marketing director, of MediaWorks Radio, says there is "certainly no complacency around our need to evolve in the face of new technologies" while The Radio Network announced late last year plans to launch iHeartRadio in NZ this year.
Stewart told B&T last year that the industry (which includes 28 networked radio brands, sixteen of which sit with the two major players MediaWorks Radio and The Radio Network) had "aggressively" moved into online and mobile, now she says the move is paying off with an increase in the level of engagement and a "substantial increase in revenue from these platforms". "In March we had 1.7 million UB's, 11 million PI's, 1.8 million live listening streams, over half a million Facebook 'Likes', and over five million PI's across 11 brands with mobile apps." There is no "current impetus by either the industry, government or the market" to go down the DAB+ path, explains Stewart who says the industry is watching the progress in Australia.
Online advertising spend has been galloping ahead in recent years but in 2012 the growth of online advertising revenue in NZ slowed to a trot. Interactive advertising now accounts for 16.9% of NZ's advertising spend, after growth of 12% last year compared to 28% in 2011.
Three factors combined to slow the growth of online last year, according to Yahoo! NZ and the IAB NZ's Maxwell-Hansen.
"Conservative advertising campaign planning, the audience move to mobile and the hunt for cheap eyeballs," she explains.
"Audiences are migrating onto mobile devices faster than the revenue movement to these personal media devices.
"A further reason is the spend by advertisers on off-shore websites – this revenue isn't reflected in NZ ASA numbers. As agencies chase a lower cost to deliver online campaigns, they are seeking cheaper inventory on offshore sites."
The growth areas for interactive are in mobile and video with continued growth in social media. "Mobile grew 176% YOY from 2011, but still only represents 0.77% (yes, less than 1%) of all online media spend," Maxwell-Hansen continues.
"There is some huge growth to be realised in this area and mobile is creeping slowly but surely onto media schedules."
But there are challenges facing this rising sector. "A big looming issue will be around social media and how it gets connected to eg CRM, and people realising how much we as marketers can potentially know," asserts Ben Goodale, managing director of specialist CRM, loyalty and mobile marketing agency JustOne.
After six years of drops magazines recorded a slight advertising rise from $209m to $210 last year, increasing its overall share of advertising from 9.6% to 9.7%. This good fortune did not carry across the entire print industry, with newspapers again taking a hit in the back pocket. Newspaper revenue dropped to $540 in the 12 months ended 31 December 2012, down on 2011's $582m.
In addition to starting the new year with $42m dollars less and a smaller share of the advertising pie (now 24.9% compared to 26.7% in 2011), there have been numerous changes.
APN New Zealand Media has sold two of its oldest newspapers, The Star in Canterbury which was established in 1868 and Oamaru Mail which was first published in 1879. Martin Simons, chief executive of APN NZ, said: "The decision to sell was based on our determination to concentrate our efforts on the North Island where most of our businesses are located and where most of New Zealand's growth would occur in the next decade." In addition to this APN NZ has seen its editorial, sales and marketing teams restructured while the Herald shifted to tabloid.
Big changes have also been afoot at Fairfax Media NZ with chief executive Allen Williams moving Down Under as managing director of the Australian Publishing Media division. As a result, Andrew Boyle, general manager of the southern region of Fairfax New Zealand, has been appointed acting managing director.
Mobile advertising is "on the verge of taking off as smartphone penetration is predicted to reach 67% this year in New Zealand" and Fairfax NZ plans to piggy back the growth says Boyle: "Fairfax Media is about to enter into a partnership with an industry leading mobile advertising company, which has already garnered considerable interest from our advertising clients." There are no plans to launch a paywall on Fairfax titles in NZ but Boyle said he will watch "with interest as our Australian colleagues launch paywalls for the Sydney Morning Herald and The Age".