Dealing with the slowdown

Bob Wootton assesses the global economic outlook and how it is impacting the media and advertising sectors closer to home. Plus: Why messing with the ABC is a big risk for publishers

Boy, do we live in “interesting times”, one consequence being that any serious decision-making has almost frozen.

Automotive manufacturers are posting slow sales as car buyers are feeling stung by Government’s volte face on diesel and are wobbled by the impacts of incoming emission regulations and the advent (or not) of autonomous and electric vehicles.

The housing market is in the doldrums, with private sales languishing though the companies that help people develop their properties rather than get scalped by the twin perils of aggressive buyers and stamp duty are doing well.  Meanwhile, the Government’s help to buy scheme is dogged by profiteering scandals.

Amidst all this, ad budgets are slower than ever to be realised too.  The pervading maxim is don’t do anything unless you absolutely have to, which recalls one of my least favourite quotes, from Lucius Cary, 2nd Viscount Falkland, aristocrat, sometime soldier, author and politician:

“When it is not necessary to make a decision, it is necessary not to make one”.

Senior business leaders quote this to this day.  It must be a required text in business school programmes.

Hiring is slower too.  Jobs are being advertised and interviews taking place, but employers are taking forever to appoint.  And for all the undoubted clean-up of unpaid internships in recent years, there are many more contract positions which indemnify employers from long-term commitments.

[advert position=”left”]

Brexit has of course taken over from impending Christmas / Easter / General election / whatever is the catch-all for delaying business decisions.

Meanwhile, frequent financial reporting drives towards a focus on short-term results at the expense of anything else.  CEO Paul Polman famously withdrew Unilever from quarterly stock market reporting during his tenure.  Few have had the spirit or leverage to follow his lead.

This focus on the short term is corrosive for brands as all resources are focused on the ‘now’ of sales rather than the ‘then’ of sustaining market share and profitability.  Hannah McCready of the Specialist Works eloquently bemoans the lack of attention being given to (building) brands in the relentless face of short-termism and a ‘performance’ mindset.

In business outlook, we are tending to resemble the competitors we face from the US and Far East when what has so often made us a powerhouse has been our difference.

While most of the mood music is about de-homogenising the pale and stale workforce, some have commented on what it takes to get to and stay at the top these days.  Inconspicuous is the word that comes to mind.  Bland, unprovocative.

This is worrying for an industry that is about innovation and creativity. Remember, media’s leaders had to leave conservative account management-led agencies once, which led to the foundation of media independents, itself widely acknowledged as the beginning of the end some now say we face.

Part of my plural existence these days involves being an investor in or advisor to several industry-related companies.  Two of these offer what I am satisfied are positive, actionable, affordable and self-liquidating solutions to big issues currently exercising advertisers – effectiveness, attribution, verification, transparency – and are targeted thus.  Both are in market and delivering.

I’m sure advertisers are besieged by all sorts after their money, but I’ve been very surprised at how few have any effective way of channelling such approaches for their own good.

A number of advertiser media leaders’ roles are also becoming more advisory and less executive.  The media owners can sense that the money – therefore the power – has migrated to business units which do not embody the competences to spend it wisely or effectively.  Only fashionably.

This despite a torrent of evidence that the online mammoths’ wares are not all they purport them to be – fake news, inflated, self-certified or worse, completely fabricated audiences…

In the last few days alone, we’ve seen Dame Frances Cairncross’ report on UK quality journalism and the UK House of Commons’ Select Committee for Culture, Media & Sport’s latest on Disinformation and Fake News.

Regulation looms, especially for Facebook, though how it will be enforceable beyond our boundaries remains unclear.  Enter Sir Nick Clegg, who frankly has little to lose and is now Facebook’s Global Director of Corporate Affairs on a reported $1m salary.  Much obfuscation will surely follow – indeed it’s already begun.

And another week, another YouTube scandal.  It’s hard to tell when one ends and the next begins.  We’ve had jihadist material, incitement to self-harm and even suicide, now it’s extremist views and hate speech.

Advertisers are becoming quicker to trumpet how as responsible companies they can’t conscience appearing in such environments – which are also extremely corrosive to their brands – and must withdraw their support.

But as ever, expect them to creep back quietly after only a few days, weeks in some cases.  Their process compass still trumps their moral compass.

Ad Age reports that an app called Tapcore, which claims to combat app fraud has itself been fraudulently generating and selling fake impressions and the US Federal Trade Commission is well under way investigating media buying practices.

Any one of these would once have stopped industry in its tracks, yet we plough on.

Although a few celebrity CMOs have begun to opine, their companies show no few signs of any follow through.

Given the stakes, ambivalence in this whole space is becoming an ideal platform for the activist investors now so feared in corporate boardrooms.

P&G has already had to react to the notorious Nelson Peltz.  Others are following and this trend will grow apace.  Such non-executives are now doing what executives should have been doing all along and some were once famous for – questioning (media) investment decisions in the continuous pursuit of shareholder value.

Here we go yet again?

The media research industry is busy too.  In the face of such stiff competition from the online behemoths, most offline media are now investing to underpin their sell with quantitative and qualitative data.

The latest example is Cinema’s welcome if overdue move towards trading on ratings equivalents instead of admissions.

The quant is of course where the Joint Industry Committees (JIC’s) – which embody both buyers and sellers – come in.

However, Mediatel reports that the News Media Association (NMA) and Newsworks are unhappy about the Audit Bureau of Circulations (ABC) and holding summit talks with the agencies.

Whenever a media research body reports a lower audience, the media owner(s) in question turn on the survey.  ‘Twas ever thus.

ABC audits circulations, widely taken as a broad proxy for likely audience, especially for the many titles whose readerships are too small for PAMCo effectively to research.  Both bodies have high integrity and amortise their costs across the widest possible user base.

Whether coincidental or not, there is apparently a strong correlation between print ad revenues and circulations.  And everybody knows print circulations and audiences are declining.

Messing with the ABC is a big risk for publishers, undermining credibility and drawing even more attention to their plight in the eyes of buyers.

But for me, two important things inform the conversation:

First, media trading (wrongly in my and others’ opinions) rules the roost at the larger agencies that speak for the most money.  Traders will always seek their adversaries’ weak spots, however unreasonably.  In reporting declining print circulations accurately, ABC innocently enables this.

Second, any media owner that behaves properly – for example participating fully in independent, rigorous and credible cross-industry research verifying its delivery – should reasonably expect advertisers to give it preferential consideration over those that don’t.

Yet the uncomfortable truth is the reverse, see my earlier comments above.

Declaration – I sat on the boards of all the UK’s JICs for almost twenty years until 1996.