The COVID-driven advertising collapse has telescoped expected five-year trends into just three months. The result? There are no longer enough dollars to support the traditional media Australia currently has, even after the mass closures of regional and community papers and magazines.
By accelerating the trend line, the COVID-19 shock has left the media with little time to adequately rethink or restructure.
Over the past week, the end-of-financial-year data flooded in: from News Corp, the Standard Media Index (which tracks advertising spend) and reports from commercial television and radio. All show the same picture: advertising is down by more than a third compared to the same period last year. Worse still: advertising spend was already down significantly in the eight or nine months before Australia started to shut down in March.
According to SMI, newspaper ads were down almost half in June and almost a quarter over the year. Free-to-air television advertising was down a third in June and about 15% over the year. Before COVID, these falls were all expected — but as a gentle glide over, say, five years.
Both the advertising and the media industries are keen to call the bottom, pointing to a post-July bounce, particularly in retail ads (thank you, Harvey Norman). But, all the normal economic metaphors apply: is it a V, a U or a dead cat bounce?
Ad spend is always finite. In most years and in most developed countries, it’s about 1-1.25% of GDP — about $16 billion in Australia. In pre-internet days, media could be confident that spend would revert to the norm — and revert to their channels. After all, where else would it go?
Unfortunately, old media mistook its effective monopoly for an iron law of capitalism. Instead, for the past two decades, ad spend has been drifting out of media and into online. Just last year, digital ads passed the 50% mark of total spend, with most of it going to the platform duopoly of Facebook and Google.
Now, that trend has also been turbocharged. Early data already suggests that any bounce back in spend is bouncing all the way over to the tech platforms.
In Australia, digital advertising is down just 8% over the year. But, on global figures at least, the platforms are out-performing. In the June quarter, Facebook’s take from ads jumped by 10%. Google-parent Alphabet ad income dropped about 8%, mainly from search, although media’s more direct competitor, YouTube, was up.
Compressing these trends hurries on the changes in the way media — and news — is created and consumed. We’ve already seen the losses in regional and community media. The next layer to be impacted will be state-based media.
Within free-to-air television the smaller advertising pool is being shifted from linear (and regional) television to services that allow users to shift viewing times through either subscription services (SVOD) or broadcast on demand (BVOD).
Media that have already built a subscription revenue stream are in a stronger position, like The Australian or Nine’s Stan. In the US, The New York Times has edged closer to being a predominantly digital play, as the first major news company to source more than half its income from its online offerings.
It’s a globally competitive space, but News Corp’s Foxtel figures out last Friday suggest it may have missed the boat and Nine has not released digital subscription figures for its metro mastheads since last year’s merger. Hmm… no news doesn’t seem like it’s likely to be good news.
Traditional media is doing what it’s traditionally done: asked the government for a handout. It’s put on pressure to end Australian content regulations, demanded the tech platforms be forced to share, and put out it’s hand for some cash (like the recent no-strings $10 million grant to Foxtel or the forthcoming Public Interest News Gathering grants).
The big losers are likely to be the downstream content creators. Australian drama production is already slumping and would be gutted by the loss of broadcast content quotas and cuts to ABC funding. Even professional sport is facing cuts as the advertising collapse forces broadcasters to renegotiate overly generous rights deals.
Listening to the questions asked each day by those msm reps at press conferences attended by premier Dan Andrews, I am feeling less and less sympathy for the msm. “Don’t write crap – it can’t be that difficult” said a former PM. Given that crap questions and crap writing still persist I am not surprised at the demise of traditional media.
“Traditional media what it has traditionally done: asked the government for a handout.”
Er… I think it’s only fair to point out that Crikey was a major beneficiary of the first round of ACMA grants, the government fund set up to support local and community media. To receive that, it had to put in a submission and jump through a few hoops, in other words, “put its hand out.”
I’m not being narky. Clearly Crikey was a worthy applicant. I’m sure the ACMA money was well spent, and hopefully, provided some local media jobs. It’s just that Crikey always frames its media “analysis” as a criticism of the traditional media, or more typically, as outright hostility to that demon known as Murdoch. But in fact its the same beast, and just as exposed to the perilous waters that lie ahead as what little advertising revenue is left during the Covid crisis sails happily offshore to Google and Facebook.
Typically stories about the demise of mainstream media on Crikey attract comments filled with ancient culture war animosities if not outright hate.“Thank God its gone!” “Rot in hell!” “An opinion I don’t like, cancel my Crikey subscription!” But what will remain when it has gone? Press releases from whatever government is in power?
As long as that’s a Dan Andrews one, all will be well… I guess… Er?
The conronavirus has put many advertising agencies into a sick bed and what has coughed up to us is a shrinking three months uneconomic trend that could extend out to five years. In our awakening delirium and coma there are no longer enough dollars to support the traditional Australian media, even after the mass closures and deaths of regional and community papers and magazines.
We understand all this.
And yet we’re appalled at the fact that “a free press” can only exist if supported by an industry that, essentially, seeks to do the opposite of what a free press wants to do. Advertising seeks to:
* alter people’s perceptions and judgements with emotions
* establish “brands” or “belief systems” as they are more accurately described
* replace facts with stories and close down objections to stories
… in an endless circle of creating news to drive eyeballs to give advertisers access, to provide money to do it all over again.
I don’t think we know if it’s a good, bad or otherwise thing. It’s happening. At the same time, we can all see what rot has set in in the corporate media world, where the media barons set the agenda according to their own interests as opposed the public’s interest and where journalists often now openly display an attitude of elitism. No longer it’s a calling to expose, tell the story, inform. No, it’s a professional job, one where they are the experts who judge what you need to know based on how many clicks/sales they get or how much they can elevate their standing in their own bubble.
Considering there is more and more “citizen journalism” taking off or new startups/coops in regional areas to return to “the calling” something good may come out of it longer term.