MediaCom Australia CEO Sean Seamer has fired back at concerns voiced by NewsMediaWorks boss Mark Hollands over the continuing decline in media agency spend on news media, labelling the comparison between agencies and direct advertisers “unfair”.
Hollands said the latest ad revenue figures for news media brands show that the buying decisions of media agencies continue to be “out of sync” with those of direct advertisers.
According the figures, digital revenue from direct advertisers grew 21 per cent in 2016, while agency revenue fell by 0.5 per cent. The index noted that this discrepancy also applied to print revenue.
Hollands said the spending trend of media agencies was concerning and unwarranted.
“Direct advertisers – those who have a relationship with a news publisher – understand the value that such a trusted relationship can bring to their own businesses in terms of new customers, client retention and profitable growth,” he told B&T.
“Our own internal research suggests media agency professionals also understand this but often follow instruction from clients who are attracted to the notion of ‘being different’, and often that has a strong digital component.”
However, Seamer said it was “unfair” to compare direct advertisers to media agencies in terms of their news media spending activity.
“They’re very different in their make-up, so if you scratch under the surface of what a direct advertiser looks like – with the exception of Harvey Norman – most of those direct advertisers are small-to-medium-sized businesses,” he told B&T.
“SMEs in Australia are typically going to be local, metro or state, and print, out-of-home and radio are the best local media options for them.
“The other thing is that print, radio and out-of-home represent a much lower cost of production for those SMEs, so they don’t necessarily need to engage in big blue chip agencies to get audio-visual content sorted out, whether it’s online, video or TV.”
Seamer agreed with Hollands’ view that not enough is being invested in traditional local media brands – in particular, print – and that multinational digital and social media platforms such as Facebook are being over-invested in.
“If you look at the decline in circulation or readership versus the decline in investment in the [print] channel, there’s a massive gap – a big perception gap – between what’s actually going on with audiences and circulation, and what’s going on with investment,” he said.
“It represents a value opportunity for clients, but we really need to focus on the outputs of the channels, so looking on the basis of return on investment rather than getting caught up in the circulation debate.
“Supporting local media and real news is absolutely critical, and that’s a big focus for us at MediaCom. There’s an onus on agencies to support local media to ensure longevity of the category.”
Seamer added that while agencies need to do a better job at supporting local media, brands such as Fairfax and News Corp need to do a better job of marketing themselves.
He also predicts that the spending trend for media agencies on news media could be headed for a correction as early as this year, with the help of better measurement standards across the multiple media channels.
“I think that will highlight a lot of the drawbacks for some of these digital platforms,” Seamer said.
“You have a look at all the debates around Facebook at the moment to do with their viewability standards and what constitutes reach, and the big thing is that not all reach is created equal, and a three-second view on Facebook is certainly nowhere near as impactful as a 15-second TVC in the middle of the cricket.