Jane Ractliffe is the Managing Director Australia and New Zealand at Standard Media Index (SMI) and shares with Darren the process and value of measuring media spend and investment across multiple advertising categories. She discusses the role it plays in providing transparency to the industry and certainty to the data for marketers, agencies and investors.
You can listen to the podcast here:
Follow Managing Marketing on Soundcloud or iTunes
Transcription:
Darren:
Welcome to Managing Marketing. Today I’m sitting down and having a chat with Jane Ractliffe who is the managing director, Australia and New Zealand at Standard Media Index or better known as SMI. Welcome, Jane.
Jane:
Thanks, Darren.
Darren:
Look SMI, you’ve been around for a while now. How long has it been?
Jane:
Ten years this year.
Darren:
Wow, a decade. We are coming up to our twentieth year. I remember you were the editor of media at The Australian.
Jane:
Yes.
Darren:
And obviously covering the industry from a journalistic point of view, but I guess SMI is an extension of that in a way isn’t it?
Jane:
In the sense that through my role as a business media reporter I could see that there was a desperate need for better visibility and what was going on from an advertising expenditure perspective and that’s where my partner and I created SMI to try and fill that gap.
Darren:
You often hear people say data around media expenditure is often wrong by about 10 to 15 % but the fact that we are all getting wrong data means it’s okay.
Jane:
I know.
Darren:
It’s pretty lazy isn’t it?
Jane:
I think there’s a number or reasons for that. People haven’t really sought any better way to do it and there’s also a level of complacency because the feedback I get from marketers is because it’s wrong for everyone, this is what they say, no one has a competitive advantage and therefore it’s okay.
Frankly, I think in this day and age where the industry is so data driven and everyone hangs there hat on having the best data or whatever to particularly accept, at a brand level, the estimates can be wrong to such a degree and to be comfortable with that is no longer acceptable.
Darren:
I wonder if part of it is that great Australian tradition of she’ll be right mate with the thumb up or whether it extends globally in every market.
Jane:
To be far it’s everywhere, it’s not just Australia, and it’s all around the world. There’s never been a way, certainly not from a brand level perspective to be able to get accurate brand level competitive spend. Through SMI we’ve been able to crack the nut on media spend. Because we take the payment data on the media agencies payment systems we now, at least on a national marketer or agency ad spend, have pretty much perfect data for all the major media; TV, Radio, outdoor, whatever.
We can break that down in numerous ways into media sectors for example, metro TV ad spend, regional TV, subscription TV. In digital we have the only data for search, for example because it comes from the payment system, the only data for social media, the only data for programmatic ad spend.
We go further, we break it down to ad format, so we have the only ad spend data for online video, online native, online audio, on and on it goes.
Darren:
And because it’s the buy side it’s going to be more reliable than perhaps asking for the sell side isn’t it? The sell side is always going to be, well, it’s a bit like this.
Jane:
To be fair some of the industry’s peak bodies do a reasonable job of reporting their ad spend and the benefit they have is that it is the total. So we are only the agency and for newspapers in particular, radio to a certain degree, there’s a large proportion of their total revenue that comes from small business or Mums and Dads right.
Darren:
Do you have a sense of what that is above and beyond the main agencies spend?
Jane:
Yes, it differs.
Darren:
No, but as a whole.
Jane:
No.
Darren:
I think you said the figure you report on is about seven billion.
Jane:
Seven and a half.
Darren:
Seven and a half billion and then there’s this crazy figure that’s been flying around of sixteen billion. I’ve always thought the Australian market was sixteen billion, someone’s lumping in every single dollar that’s spent on marketing, not just media.
Jane:
Well of that sixteen, more than half, 8.8 last year was digital, and that relies on estimates of Google, Facebook, Twitter, Snapchat and whatever.
All I would say is that ten years ago when we started SMI where we used to compare ourselves to Caesar as it was back then, which was the combination of all the industry data, the whole market was worth twelve, maybe thirteen billion, right.
And apparently in ten years it’s grown by three and a half billion dollars which seems an exceptionally high growth rate. If that was the case, all media executives would be driving around in super duper Maserati’s, you know there would be such a wealth of revenue in the industry, that we’d all be doing that.
Darren:
Especially in the context that the last ten years we’ve seen so much pressure on unit prices of media so to have total revenue growth at a time where in ten years we’ve had this constant downwards pressure it makes it even more extraordinary.
Jane:
We don’t know obviously, no one knows really what’s happening in the small industry part of that so if you look at the total sixteen billion and compare it to SMI, SMI or national marketers are only contributing forty four and a half percent of the total.
So you have to start applying, what is a reasonable proportion. How big do you think the small ad market is relative to the total? We can see that in the past ten years the ad market has had a nice cumulative growth trajectory, it might have been one and a half percent, two percent over time.
The agency market over time, despite everyone always trying to push it down, continues to grow. Agencies are changing their business models, their services to clients. You know they are really proactive in delivering lots of innovations to clients and as a result the amount going through agencies continues to grow and grow and grow.
And it has, like the last six years, we have seen consecutive growth in a total agency spend right. But to go from twelve to sixteen knowing agency spend has not grown at anywhere near that rate means there has been some apparent massive boom in small business ad spent that has gone unreported.
Darren:
And that could be the rivers of gold that used to be the Fairfax and News Corp classified, which was about the only small business paid media opportunity that existed. Is that Facebook and Google now, that’s the possibility.
Jane:
The only real comparison, like if you go back to my journalist days, when we reported on the Caesar data at the time back then, the Caesar data included a section which was called ‘search and directory advertising’ and back then white and yellow pages were part of Telstra. So they reported their actual figures to Caesar and it was about two billion dollars back in 2009, the search and directory market, maybe two point three.
So they no longer provide that data because now that part of Telstra is owned by private equity so they don’t see a need to do it. So it’s not reported any more but if you look at the digital numbers for the industry that are reported it’s about four billion.
Again you have to start applying what is reasonable. Clearly, Google has taken most of that two billion dollars that use to be part of Telstra or yellow pages or whatever but yellow pages still exist so there is still something there.
So you can assume they’ve taken about one and half billion so that was the size of the small business directory’s advertising market at the time, to what degree has that grown?
Darren:
Good point. One of the clever things about SMI is you’ve walked this very fine line between providing valuable business knowledge, media knowledge without stepping over into the competitive confidentiality.
Rather than looking at a brand level creating quite a detailed category view of the market place it’s provided useful insights without actually revealing what each competitor’s spending is, hasn’t it?
Jane:
You’re right. It’s a very fine line that we continue to walk and it’s hard because no advertiser will ever want their true ad spend revealed.
Darren:
But they want to know all their competitor’s spend.
Jane:
The number of conversations I’ve had where someone says, ‘but why can’t you give me theirs’, and I say, ‘well will you give me yours’ and they say, ‘of course not’. Well it works both ways.
Darren:
There’s a lot of talk in the industry about trust and clearly it’s about building trust with the agencies and their clients, to be able to take this data and break it down into a way that makes it useful but doesn’t step over that line. It didn’t happen overnight did it?
Jane:
No. But this is a good point because there is always criticism, agencies aren’t transparent, media agencies aren’t transparent, but the fact that what they have done with SMI completely rebuts that argument. They have been working with us for ten years now to improve transparency with the caveat of course that you can never reveal individual advertising spend and it is not easy.
We have been able to break the category data down into really granular levels of detail so advertisers can actually have a true view of what their category is doing. So they can actually know now what their category is doing.
We put in place lots of protection. For example we have just released for digital a new service called client count where we can show for each individual category, across all the digital sectors, so search, social, programmatic, content sites, video sites and the like, the actual number of clients active that month in that category and therefore an average category spend.
But what we’ve done in the back end of the system is if there are three or less clients active in any of those cells in the month, it’s blank.
Darren:
Look that makes sense because at that point one of those three could easily extract what there expenditure is and have a very good idea of what their competitor or two is doing.
Jane:
Exactly, but it’s a super useful tool because previously we could say for airlines, let’s say 300,000 dollars spent last month for social media, that’s nice but we didn’t know if it was three airlines contributing to that 300,000 or if it was ten.
Darren:
Or one.
Jane:
But for an advertising perspective you can actually see now what is the average amount being spent by my category on programmatic and compare that with my spending. Am I above or below? How much is my category spending per month on social media?
One or our next projects, because we are continually developing the data is to do the same for Outdoor. Outdoor has a certain level of opaqueness as well, so we are about to do client count for Outdoor and average category spend for Outdoor.
This will be great for advertisers. They can actually know for the first time, what is the true amount on average being spent. It’s real data but it’s not revealing any individual advertiser spend and that’s the key. It protects the advertiser, it protects the agencies and it protects SMI.
Darren:
I also think because you are dealing with most, not all the media agency groups, but most of the major players and even some of the independent players that some people would describe that as herding cats and the fact that you have managed to get so far over the ten years is obviously testament to meeting the expectations of those players.
Jane:
They wouldn’t do it if they didn’t gain value and have visibility on the market. To be able to see each month what is actually going on is critical for agencies and prior to SMI they were all flying blind. Everyone was guessing. There was no way of knowing each month in a timely way what was actually happening.
Back in the day I remember when I use to write articles about advertising revenue and I would quote Harold Mitchell or Pete Hall, I would get so many phone calls from sales directors, CEO’s of media companies asking, ‘what else did Harold say, what else did Annie say’ and even equity analysts within Goldman Sachs would ring me ‘what else did they say’?
I could see there was demand for better knowledge. You just imagine if there was no SMI today. Everyone would have no idea. Everyone might assume digital was 80% of all spend.
Darren:
Well that’s what the trade media reports because that’s all the digital stake holders.
Jane:
It is a fascinating media, but every media has its place. You look at Press and what they do with travel advertising. A print ad is fabulous for being able to detail offers where you’ve got lots of detail. It’s a natural thing for a print ad.
Outdoor has a great role to play as well, especially with digitisation. Digitisation of outdoor screens in shopping malls is fantastic for the whole point of getting closer to the point of purchase.
It depends on the advertiser, it depends on what they are trying to achieve but we have a really healthy media industry here and it is because we are competitive and everyone does a really good job of managing innovation within their own sector. There is never nothing happening.
Darren:
We’ve had quite a few conversations on out of home and obviously broadcast and print but it’s interesting you mentioned print ads. It’s well reported and I think Mark Ritson said looking at media trends, it is printed newspapers that have really suffered over the ten years with circulation, but in actual fact they have done quite a good job recently with increasing their digital reach, haven’t they?
Jane:
Yeah.
Darren:
And they are packaging it quite well getting both the print and the digital.
Jane:
Newspapers are never given the credit I think they deserve, because they monetise their online content really effectively, well before any other traditional major media. They are now, from a national marketer agency ad spend perspective, 30 % of total, what we now call, news media revenue, digital. That’s well above the others, magazine might be the next at 10 %. It is way, way, way, above anything else.
It is a package solution for them, but they can do both really well because they’ve got the premium content. So if you are an advertiser that is after eye balls and want a premium environment in which you want your ad to go, it’s the natural market.
Darren:
Now the other one is the growth of digital. Ten years ago what was digital?
Jane:
Two percent
Darren:
And now?
Jane:
Twenty six.
Darren:
So that’s a phenomenal growth.
Jane:
Yes it’s a complete structural change, absolutely.
Darren:
In the US they are reporting marketers will out spend on digital over broadcast television in the US in 2019.
Jane:
No, I don’t think so.
Darren:
They are talking about all digital. And that’s the other thing, people talk about digital media and they actually mean search, they mean video, they mean display.
Jane:
We’ve bought data in the US and we can see, keep in mind agencies are predominantly looking to do campaigns across the country. It’s rare unless you are a tiny agency to be doing little regional campaigns. So in the data we collect from the major agencies in the US, more than 80% of all the agency spend in the US is either TV or digital.
It’s 40% for each and Outdoor is so fragmented there. Newspapers, there’s only a couple of national newspapers, so it’s a tiny proportion of the market. Magazines, they only buy in a couple of big titles like US Vogue, People and the like.
It’s predominantly TV and digital. So to say digital is going to overtake Television, you are assuming again there is a massive small business expenditure going through digital and arguably there is with Google and Facebook etc but you can’t actually know the true size, so it’s really hard.
Darren:
I guess the other thing is just lumping all digital together is a misnomer because in that it’s search, video, display.
Jane:
But we get all that in the national marketers.
Darren:
But you get it as a break down. People are either bundling it up to make it sound more impressive – all digital media is bigger than television. That is a bit like saying regional is bigger than Metro. They are fragmenting one and consolidating the other to make it look more impressive.
Jane:
I suppose the issue is for me is that I just like to deal in real facts. When you start having to talk about the total market i.e. including direct, it invariably requires a lot of estimation.
Darren:
Yeah, I’m just saying I think we have to change the discussion with digital media to, do you mean search, do you mean display, do you mean video? In a way they are all different channels. They maybe all be on digital platforms but then you can argue all media today apart from actual print media is digital. Radio is digital, TV is digital.
Jane:
Part of it. Well it’s linear.
Darren:
The way it’s delivered is digital.
Jane:
I see it through the prism of advertising expenditure. Linear Television, through the airwaves, through the TV frequency is still 95 % of all TV ad spend in our data, same for radio.
It will grow. What’s going on with podcasting is fascinating for radio. It’s going to be a great opportunity for the industry to delve into a whole new area. Clearly it has very strong audiences so it would be completely normal for advertising revenue to follow.
Darren:
We saw the networks in Australia really starting to pitch their, some call it catch-up TV, or their digital delivery, streaming, so does that get lumped in as digital advertising or is that broadcast?
Jane:
No, it’s digital because again you are not buying a 30 second TVC, you’re buying either a digital ad on a cost per thousand basis or whatever the metric is that they have used but it is being delivered through the internet.
It is bought as a digital media and the great thing about the SMI data is that any time an agency goes to pay for something, the first thing they have to say is, what is the media, what am I buying?
That will bring up lots of different options. Like, if you are buying a press ad you have to specify colour or print. If you are buying a linear TV ad you have to specify is it a 15 second TVC or a 13 second TVC or whatever. If you are buying a digital ad, you have to specify, is this through programmatic is this a direct IO, what is the format, what is the buy type.
Darren:
The other area that’s interesting is programmatic because again if you read the trade media, programmatic is just expanding and accelerating in popularity and is going to consume the way all media is bought eventually, is that true?
Jane:
No.
Darren:
I keep reading the trade media and its programmatic this and programmatic that.
Jane:
Well, the trade media are also reporting on the voluntary administration of numerous companies. Videology was taken over by Amobee and Isismic and just gone…
Darren:
Caput.
Jane:
Into voluntary administration, and that’s a key issue for the industry overall. I think there has been such enthusiasm for programmatic that you’ve seen so many people jump into the space and say we are the best at programmatic because we have this special feature or we specialise in this.
I think anyone who has seen one of those Lumascapes would readily agree it’s a market that needed sorting out. It was just not large enough to support so many competitors and that’s what is happening now.
Some significant companies and even those like Sizmek that had private equity backing are suffering and unable to trade.
Darren:
I think it is also a bit like the Gartner hype curve isn’t it? A lot of the trade press and the trade media pick up on the new shiny thing and it gets talked up because the investors are behind it. But then the actual part of the curve where it becomes main stream and starts getting used is often the part that gets missed.
Jane:
I’ve seen a few bubbles in my time. You remember the dot.com bubble in 2010.
Darren:
Oh yes we started in 2000 so we were part of the Dot.com boom, but it became a bubble that went bust.
Jane:
I remember at the time as a Journo this is one of the reasons why I’m so passionate about real data. Through the Dot.com bubble there would be some teeny tiny media company that would start and say ‘I’m going to be the e-tailer of the future.
And then there would be some unusual, let’s say research that would come out and say ‘oh yes online retail, this is back in 2002, is going to be worth, I don’t know, 10 billion, 15 billion, they would just like, put a figure on it. But it would have a reputable company’s name on it so I shall not name names but I know and still remember them.
I remember as a Journo writing about this because it was the flavour of the month at the time and such and such retailer or online company was about to ASX list through an old mining shell company.
Darren:
A back door listing.
Jane:
Back to the back door listing, there were so many back door listings.
Darren:
A cheap way of doing it.
Jane:
But I actually felt guilty writing, and such and such research company says the online retail market is going to be worth twenty billion dollars by blah blah blah. And I knew in my gut there was absolutely no way they could justify it.
You couldn’t interrogate the data in any way, but as a result these companies listed and the press was complicit in this.
I well remember feeling a sense of almost guilt because yes I was reporting it, but everyone was reporting it but I knew that the claims were probably unachievable. I suppose we tried to put a bit of pessimism into the way we reported it, but even so.
Darren:
It’s hard because as you say there’s no actual data. It’s basically someone sitting there going, well based on my reputation as an ‘expert’, this is what I believe.
Jane:
I would love to know how much did they get paid?
Darren:
And a lot of people got rich and a lot of people lost their shirts. That’s what a bubble does.
Jane:
Yes but how much did those research companies get paid. It’s a terrible, terrible thing to not have accurate data.
Darren:
A lot of people talk about the media industry and the ills of it. One of the groups I hold accountable and are very rarely held accountable are actually the big investors in ad tech and online media companies.
Do you remember after the Dot.com bubble burst there was a lot of talk around being able to engage with customers on a one to one basis?
Then somewhere around 2006, 2007 the conversation changed about online media to mass audience delivery, efficiently at a lower price.
I think if you are an investor and you invest in an online media company who is saying yes, we are all about customisation and personalisation and actually engaging on a one to one basis, and then you go, that’s actually not going to make me the return on investment I want. I want you to go out and make lots of money based on you going out and reaching lots of people cheaply.
And I see that a lot when I talk to marketers that still talk about digital media in terms of impressions and CPM’s. When in actual fact digital media can certainly reach a lot of people, whether it does if effectivity and efficiently is still questionable isn’t it?
I’m saying the business model is what has caused a lot of the issues around brand safety, transparency and ad fraud.
Jane:
I can’t speak about effectiveness and the like. The IAB is really trying to do this, when you get to 26% of spend, you have to have a really good measurement system. Historically the digital media haven’t had a brilliant measurement system.
It’s strange because you think the nature of digital is you could press a green button and all the data that you need would be there to go into a correct bucket.
The back end of digital, as I have learnt because I spent a lot of time in the back end of payment systems to try and get better and better data, but the back end of digital is arguably more complex and difficult and opaque and hard to extract information from than any other media.
Why is that? I am amazed this far into the digital media journey, some IT person hasn’t come up with a tag or something that can sit on each bit of advertising so that if you do need to measure it or know where it went or know anything about its journey, you could see it. You can’t. You cannot see, it’s very, very hard to be able to see.
So we can see it from a payment perspective, we know how much was paid but what it actually did, where it went, no idea.
Darren:
That’s really what you are providing is an insight to where the investment is going.
Jane:
Yeah, we’ve got that bit nailed.
Darren:
So the next part is I guess for the industry and you mentioned the IAB is to start them proving what it actually bought.
Jane:
I think Gay is doing a great job, the whole cross measurement thing that she is trying to do and a real focus on measurement. I don’t envy her because it’s super hard when you have so many digital players in the market, each with their own commercial interest, trying to create consensus on anything is incredibly difficult.
Darren:
One of the problems as you say is there are so many and they often have got different agendas.
Jane:
Yes.
Darren:
The interesting thing is, like view ability. View ability of online video, if someone watches the first 5 seconds, have they viewed the message of a 15 second ad or a 30 second ad?
I know it’s interesting from my own perspective looking on YouTube. We’re making 3 minute videos and at one minute the viewership dropped below 50 % when you actually dived deep into the analytics. So we started making one minute videos and it drops off at about 20 seconds.
No wonder people are talking about 6 second ads as a way of purely just trying to get high performing online video.
Jane:
I’m just pleased that what I do is measurement of advertising expenditure. I think the measurement of audience or performance is just such a ridiculously complex scenario. I’ll leave it to them.
Darren:
If they do answer that then there is going to be quite an interesting synergy in the future between investment and performance because ultimately the value equation is not just what you bought, but how well that performed for you.
Jane:
I think it is critical for digital as well. If they want to maintain such a large proportion of national marketer ad spend, it is encumbered upon them to get better at measuring it from an audience and performance perspective. And they are working towards it.
Darren:
So what are the plans for SMI? Which countries are you in now?
Jane:
We publish in New Zealand, we publish in the US and the UK. We will soon publish in Canada and a couple of other markets as well.
So it is all just about continuing to develop the data. It is interesting because the needs in each market are always slightly different. The data taxonomies in each market are slightly different.
The way each individual industry sees itself. As an example cinema in the UK is considered as part of Outdoor.
Darren:
Oh okay.
Jane:
And same in the US. So within our Outdoor sector, we will have poster, street furniture, retail Outdoor and then cinema. Whereas if you said that to an Australian they would say that is not right.
Darren:
I guess if you call it out of home, you do have to leave home to see it.
Jane:
True. I don’t think Val Morgan would like it.
Darren:
It is interesting that you said that because we often have to deal with global procurement teams who are inclined to come into the Australian market with a view that media is the same in every market.
Jane:
No, no, no.
Darren:
And it’s very very different.
Jane:
It’s actually fascinating. If you look at a different taxonomy, we do data in China, we don’t publish it yet in China but as part of our quid pro quo with some of our agencies, we do their data in China. So we clean it for them and provide it back to them so that they can report back to clients more quickly at the end of the month. The different types of subscription TV over there, it’s fascinating. The different media sectors within different markets.
Darren:
With SMI, would you consider yourself a small to medium sized enterprise or have you grown beyond that?
Jane:
Less than a hundred people, so yes definitely small to medium.
Darren:
We call ourselves a micro multinational, in that we are an SME that is in multiple markets. We are also in the UK, US, Singapore for Asia and Australia. Similar markets.
Jane:
Fantastic.
Darren:
That gets a laugh just as you did when I say micro multinational.
Jane:
Well you can these days, can’t you? With communication and the technology now, it’s not so hard to keep in touch.
Darren:
So if there are marketers that are listening that are wondering how to get more value from the data that you guys produce, I guess they just contact you, Jane.
Jane:
The agencies from a category perspective have only got access to the parent level categories. So like total retail, total travel, total Auto for example, so we then have a premium tier which we then sell ourselves.
So if you want the data for travel let’s say, broken down further into airlines, Government tourist bureaus, Hotels accommodation and the like, or Auto brand broken down into brands sponsorship, SUV’s, micro small cars, medium large cars and the like, you have to come to us.
Darren:
It is interesting because the media agencies are participating because they see value from it, but ultimately the real value is for advertisers isn’t it?
Jane:
Yes, absolutely, like the whole purpose of SMI is initially to enable the media agencies to do a better job for their clients. Because they have market transparency they can for the first time know what is going on and so provide better advice to their advertiser clients.
Darren:
Well Look, I have just noticed the time, it’s been terrific having a chat, thanks for popping by.
Jane:
Thanks Darren, it’s been fun.
Darren:
And just as a final question, can anyone access the SMI premium data such as, I don’t know, consultancy?
Ideal for marketers, advertisers, media and commercial communications professionals, Managing Marketing is a podcast hosted by Darren Woolley. Find all the episodes here