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The Audit Bureau of the Future – IFABC 5 November 2014 Script – Carolyn Morgan 1: Title slide I’m delighted to be presenting to you all today. I’d like to say thank you to Jerry Wright for asking me to update the report on the “Audit Bureau of the Future” that I presented to the IFABC General Assembly in Madrid two years ago. Since April this year I have been reviewing published stats on global trends in media and advertising. I have also conducted an online “change census” among 23 audit bureaux, plus interviewed 10 European bureaux face to face in Zagreb at the IFABC Europe conference and Tom Drouillard, new head of AAM in the US over the phone. In addition I have interviewed by phone 10 senior agency executives and advertiser marketing executives to understand the buyers view. 2: Content slide This presentation covers the main findings and opportunities for Media Audit Bureaux to develop in future. In addition there is a 120+ slide report available to all of you to refer back to. And a short exec summary, which you are welcome to share with your respective boards. So today I am going to cover: - current trends in media consumption worldwide - the buyers view from the interviews with agencies & advertisers - what we see as the “7 steps” to the media audit bureau of the future We are going to have a break for Q&A after the first two sections which Jerry will moderate, and then we have more time scheduled after the last section. [check] There’s a page where you can submit questions by typing during the presentation, and then I can answer them when we break for Q&A. 3: “Mobile driving internet…” There are clear regional variations in how internet access is changing. In Europe & North America fixed internet access is widespread, typically over 50%, but mobile is moving more rapidly with >75% penetration. In the purple regions: Asia, Lat Am, North Africa, South Africa, mobile is already over 75%, even where fixed access is less than 50%. Forecasts now project that 80% of literate adults worldwide will have mobile internet access by 2017. Tablets will replace PCs, but smartphones will drive growth: by 2017 that means 3.5 bn smartphones and 1 billion tablets. Large screen size phones are blurring the boundaries. 4: “Mobile devices are changing consumer behaviour” This explosion of mobile devices is changing how people consume content and how they shop, and these trends are seen everywhere. The phone or tablet is becoming the default device for web browsing whether at home or travelling. Mobiles are used to multi-task – check emails or contact friends – while watching TV. Or even to watch entire TV programmes. Mobile is an important daily news source, especially given the growth of social media as a referral source for news stories. 5: “Fastest mobile web growth in Asia…” This chart shows just how much mobile web access has grown just in the last year. Globally it has grown from 14% to 25%. The pattern is widespread but it’s particularly dramatic in Asia and Africa. 6: “Time spent daily on digital video…” In the last two years the time spent watching digital video has doubled for most age groups, with <34s now watching on average 35 minutes of digital video a day. The interviews I carried out with agencies and advertisers show that in some regions this trend is even more marked. Cynthia Evans of GroupM said that in LatAm digital video was around a third of total viewing. And David Porter of Unilever in Shanghai said that affluent young Chinese will happily watch an entire programme on a smartphone. I’ve also seen stats that back up that owners of larger format phones spend more time watching digital video. Plus inevitably the extra time that mobile media consume is at the expense of print, radio & TV. 7: “mobile commerce growing steadily…” These stats from Global Web Index show the growth of mobile e-commerce. This was a particular trend noted by Gary Lim of Johnson & Johnson in Singapore and David Porter in Shanghai. 8. “Print publishers now embracing digital channels…” So how is this affecting traditional publishers, core customers for many audit bureaux? Most now accept print is in long term decline; and certainly news brands are finding online is expanding their audience, and advertising is expanding. Mobile digital edition revenues are growing, albeit from a low base. B2B media are making a more rapid transition to digital subscriptions, as the decline in print recruitment advertising undermines the profitability of print. New digital revenues are growing, but barely replacing print losses, especially in North America and Western Europe. And pureplay entrants are taking share. 9. “Magazine publishers grow digital rev to replace print…” So this slide based on PwC analysis shows how digital revenue (the top section) is growing as print revenue declines. Interestingly, publishers are having more success in digital advertising than circulation, and B2B publishers are making the transition more rapidly than B2C. 10. “Pure play digital news media becoming a threat” But traditional print media need to watch out for digital pure plays. This analysis by the Reuters Institute asked readers in different countries which news brands they had used as a source of news in the last week. The pale blue column on the right hand side is the pureplays – so you can see in the US they are neck and neck with traditional media. In the UK established news brands are still ahead, but the likes of Buzzfeed, HuffPost are growing internationally, so this could change in the next couple of years. 11. “Mobile will drive digital ad spend, squeezing print” Moving onto advertising spend, these statistics from Zenith Optimedia show that, if anything, the switch from print to digital is moving more rapidly than we forecast 2 years ago. Internet advertising will expand from just over 20% to almost 27% of total ad spend by 2016, driven by a dramatic expansion of mobile advertising to 7.7%, bigger than magazines or outdoor. While TV pretty much holds its own, print is the big loser, shrinking from 25% of total spend to just over 20% by 2016. 12. Programmatic advertising accelerating worldwide The stand out trend in digital advertising is the growth of programmatic, allowing agencies to buy an audience automatically across multiple websites. This is really taking hold in the US, where agencies appreciate the lower costs, but clients are increasingly concerned about the lack of transparency and the risks of ads appearing in inappropriate contexts, of which more later. Programmatic is becoming more widespread in Western European markets, but as yet is relatively small in China. 13. Global media market trends: the view from 2014 There’s much more detail in the full report; which you can all review in detail later, but here are the top-line trends. Mobile growth is powering internet access worldwide. This is driving change in consumer behaviour: the most important trends being multi-screen usage, digital video viewing and m-commerce. Traditional publishers are almost replacing print revenues with digital -- but the “digital native” media are gaining ground with consumers. Ad spend is shifting to digital mobile, with print declining even faster than we projected two years ago, and digital video eroding the share of broadcast TV. 14. Title: The buyers view So now let’s take a look at the buyers view, based on my interviews with global advertiser and agency heads 15. Buyers view (list) Here’s a list of the people I interviewed: most had global or pan-regional remits. It’s a mix of different agency groups and major advertisers including GSJ, Johnson & Johnson and Unilever. 16. Buyers view: main trends in media landscape First we asked for their take on the main media trends, and these largely coincided with what we were seeing from published stats. In LatAm and Asia, if anything the trend to digital screens and video content was more pronounced, as the adoption of mobile devices provided a new way to reach consumers using the impact of video-based ads but not traditional broadcast TV. Thus for major advertisers, digital video and multi-screen is now the core of campaign planning. The continued expansion of digital advertising, and programmatic was a key trend, and this, with the emergence of mobile digital video, led to the view that print is now marginal, especially in China and LatAm. Buyers also have an eye on the emergence of social advertising and m-commerce among younger affluent consumers. 17: Buyers view: campaign planning, buying, evaluation Planning is holistic: with clients considering paid, owned and earned media across all platforms at once. There’s much greater focus on outcomes in planning: ie volumes, audience, changes in attitude, enquiries and sales. Large clients and major digital media are planned at global level; some campaigns are planned at pan-regional level, but then are often adapted for each country, and in the case of China, at city by city level. Video is now a core part of the plan: Unilever in China plans video first, then sponsorship/ content second. Standard display, print and OOH follow later. Many brands have highly detailed audience targets, and get frustrated when they can’t buy at a targeted level – as trading currencies are based on broad audiences. As far as buying is concerned, agencies still have specialists for each medium, but based within a single buying team. There’s a big skills gap in programmatic buying – although the largest agencies have invested heavily. Evaluation of campaigns is now even more sophisticated. Clients have sophisticated models for evaluating paid, owned and earned media, built in partnership with agencies and incorporating client data on target outcomes. The growth of digital means more emphasis on real-time marketing as campaigns can be reviewed against client outcomes and adjusted in-flight. 18: Buyers view: ad risks and measurement issues The rapid growth of digital advertising is drawing attention to new risks in advertising: Was the ad seen by the target audience and for how long? Was the ad shown in an inappropriate context? Was the ad seen by people or computers? In less well regulated markets, buyers are concerned about online fraud and lack of transparency in measurement. With the growing reliance on data, there are concerns that algorithms connecting disparate data sources could be flawed. And the growth of social media as part of campaigns carries the risk of a consumer backlash. Measurement hasn’t kept up with the changes in how campaigns are planned. Buyers want to track one customer across multiple platforms, but have to aggregate different measures and still rely on intuition to fill the analytical gaps. Ideal would be to be able to measure relative effectiveness of different media Comparing research data cross border is still harder than it should be. Viewability is a concern: has the consumer seen the ad? And can we adjust costs if they have not? Buyers perception is that existing currencies are slow to adapt due to vested interests on boards, and that it’s the outsiders who are innovating. Multiple media JICs are too costly: they need to merge. 19: Opportunities for audit bureaux Buyers have suggestions for new products and services that audit bureaux could develop, based around the risks and issues they face. Measuring the cross media audience: interest in independent media brand certificates and also audits of media owner cross-platform data. Making cross border comparisons: working with the industry to establish global standards Digital ad risks: including viewability, brand safety and online fraud: developing ways to certify tech vendors claiming to mitigate these risks and promoting transparency in digital advertising. Emerging media: video, mobile, social & ecommerce – create an opportunity to develop new metrics and standards – and ultimately to track consumers from media to purchase. These suggestions are constrained by perceptions of audit bureaux strengths and how their skills complement other measurement bodies. There was support for the independence of audit bureau and their ability to bring the industry together to build consensus. However there is a view that industry bodies are slow to change, blocked by vested interests and the multi media JIC structure is too costly. So bureaux would be supported in plans to rationalize JICs and renew board members. 20: Q&A We’ll take a break here and there’s an opportunity to ask some questions on the media trends and the buyers view sections. You can submit a question online, or ask it now and Jerry will moderate the Q&A. 21: Media Audit Bureau of the Future This section looks at what changes audit bureau around the world are making to their products & services, and how they are innovating. It sets out 7 steps that every IFABC member can take to innovate in their local media market. 22: Audit bureaux view: media trends past and future As part of the online Change Census, we asked bureau for the main changes taking placed in their markets, and the themes were in line with what we have heard from the buyers. Many of the 23 bureaux that took part have also observed consolidation of publishers in their local market. 23: Industry view: cross media measures… And there are similar views from industry bodies across Europe. EACA state that ABCs/ audit bureaux are trusted but have to move beyond their historical business model. 24: Traditional media audits will continue to decline Looking across a range of bureaux, print media advertising is in steady decline, meaning less funding for audits. Many bureaux are seeing customer numbers declining as publishers consolidate; this has contributed to the Danish ABC closing. As yet digital revenues, both web and mobile, for traditional publishers are still small scale so not a major opportunity for bureaux, and there are alternative measurement options, especially for the web. Within digital advertising, there is more emphasis on outcomes or response and as programmatic grows the value of audits is questionable. A large part of the growth in mobile advertising is from facebook and google, who have their own measures. Buyers’ focus on audience profile favours panel/ research data rather than census. 25: Change census shows many bureaux evolving But according to the online change census, in the last two years many bureaux have evolved their activities, and have further changes planned. Most have expanded their stakeholders to include digital publishers, other media and agencies. Many are in the process of rebranding, changing focus from “print” to “all media” Products and services launched in the last two years are now typically contributing 10-20% revenue, making a contribution to the anticipated decline in print, with further launches planned. Overall, customer numbers are down, although many bureaux have won new customers to offset losses. Responding to the faster rate of change in the media environment, many bureaux are updating their rules more frequently, although there is more work to do. Bureaux are reviewing how they publish data to suit the changing needs of buyers. Many bureaux are partnering with other media auditing organisations, and most have hired in new digital skills. 26: high level of recent & planned launch… Here’s a snapshot of the products and services launched in the last two years, with digital publications and multi-platform certificates now more common. Future launch plans include measuring events, video, OOH. And several are looking at helping buyers manage digital advertising risks by auditing vendors tracking viewability and brand safety. Plus some are investigating merging panel & census data, often in partnership. 27: many are partnering A number of bureaux are partnering with other local media measurement bodies to provide a more holistic, multi-platform service to buyers. 28: IFABC change census…example Brazil In the full report, we have summarized the key innovations for each member that participated. This will help other members who are planning to rebrand, add new stakeholders, partner or launch new services to identify members who have taken similar steps and may have best practice to share. Here’s an example of the summary page for our host, IVC of Brazil. 29: Future opportunities for audit bureaux So here’s a summary of the new products and services that bureaux could develop, that fit with the media trends, the buyer’s view and the experiences of other IFABC members worldwide. The first three issues were identified by buyers: 1. Cross media audience: opportunities could include media brand certificates, auditing media owner cross-platform data or developing cross media deduped reach, which some bureaux have already developed for B2B media. 2. Emerging digital media: bureaux have an opportunity to help develop standards and metrics for video, mobile apps, mobile ads, streaming radio, and possibly social media and e-commerce 3. Digital advertising risks: bureaux can help to reassure buyers that vendors on brand safety and viewability by certifying tech vendors, promote transparency in digital advertising and help to define engagement measures. 4. Non digital media: not identified as a priority by buyers, this can provide useful incremental revenue for bureaux while they invest in digital media measurement. Many bureaux around the world have successfully developed revenues around measuring events, OOH, TV, free newspapers or catalogues. 5. Cross border comparisons: identified as an issue by buyers, can’t be tackled by individual bureaux, but establishing global standards is a potential project for IFABC. 30: 7 steps to success: future media audit bureau Different bureaux around the world have varying local environments and may have other media measurement bodies in their local market. Based on the experiences of the bureaux that participated in this project, we have developed a set of 7 steps that bureaux can take, starting with the core requirements of engaging with agencies and advertisers and building credibility and trust across multi-media. All bureaux should progress along this path: the precise speed will depend on their local market and the resources available. So the first step is to engage with agencies & advertisers directly; then build credibility and trust across multi media. Bureaux should then work in partnership with their current clients, publishers, to help them exploit digital opportunities. With this base, bureaux can explore options to provide trusted multi-media data, and then to create measures for new types of media – both digital and non digital. The final steps – which may mot be appropriate for all bureaux – are to provide the stamp of trust for processes in digital ads, and to collaborate or even partner with other measurement bodies. So now we’ll look at each of these steps in more detail. 31: step 1: engage with agencies & advertisers directly Add agencies to Board where possible, and create an advisory group of meet 1:1. Bureaux that have launched successfully strongly advise getting agency support in advance. It’s equally important to meet advertisers directly to understand their challenges 32: step 2: build credibility & trust across multi-media The industry needs to feel that the bureau is credible across multi-media. Many bureaux have rebranded from “print” to “media” to support this: talk to your colleagues before you take this step to learn from their experience. Build relationships with other media JICs and measurement providers. Grow your profile in the industry: it helps to have an influential figurehead who attends key events and meets opinion formers. Widen your board/ stakeholder membership to cover digital & non-print media owners & agencies – and help break down silos between media types. 33: Step 3: Help publishers exploit digital opportunities Traditional publishers are the core customers for audit bureaux – so it’s important to support them as they evolve their business to digital. The Netherlands offers training for publishers, and Switzerland provides consultancy and creates market research. Many bureaux now offer media brand cards with total cross-media reach, or have simplified audit rules, as the UK has done. Most now audit digital editions and publications: stay flexible and let rules develop as the industry evolves. As publishers revenues come under pressure, they will seek lower audit costs, so streamline your processes, and explore low-cost alternatives, like the Romanian small publisher audit. 34: Step 4: provide trusted multi-media data Bureaux have a reputation for integrity and being a neutral party, so use this to aggregate and publish useful data that helps agencies plan. Spain and Switzerland now publish monthly ad market shares, which generates extra revenues. Plan datasets so that agencies can use them easily. Several bureaux have developed web portals or mobile apps that aggregate data from their own audits and third parties which are made freely available to the media industry. Providing trusted multi-media data cements the bureau’s credibility in the local market. 35: Step 5: Create new media measures Where the local market permits, bureaux should grasp the opportunity to provide web audits, maybe via a partnership, to form part of multi-media reach. It’s also worth engaging with IAB, digital agencies and relevant JICs to understand the issues in digital advertising Actively look for other media – digital or otherwise – where there are opportunities to create measures. Many bureaux are earning good revenues from auditing events, outdoor, free newspapers & catalogues, stand alone mobile apps or e-newsletters 36: Step 6: Provide stamp of trust for processes in digital ads Buyers are increasingly concerned by the risks in digital advertising, and are supportive of audit bureaux certifying third party vendors. The UK and the US are well advanced in this field. As many of the organisations are global, there is a strong case for harmonizing approaches across borders. 37: Step 7: collaborate with other measurement bodies Advertisers and agencies are planning campaigns across multi media, with highly targeted audiences and with specific outcomes in mind. Audit bureau who don’t’ already have expertise in other media or in panel/research would do well to partner with local readership providers and explore ways to integrate different types of data. A number of bureaux are already partnering with other web, TV or press media measurement bodies. 38: Many ABCs are already taking these steps I’ve mentioned some of the local bureaux who are already exploring these ideas. In the full report we have several case studies of best practice for you to explore. Feel free to talk further to the members here at the GA or afterwards. 39: Mobile app audit: IVW Germany Here’s an example of the case study on how IVW in Germany set up their mobile app audit – it’s expected to generate €145,000 in 2014 and they have audited 350 apps to date. 40: Advertising & media measurement in flux: audit bureaux at a crossroads There is a consensus that digital media will continue to grow rapidly worldwide, driven by mobile and video, changing consumer habits for good. Thus print media will continue to decline, and advertisers will focus on digital media as they follow audiences Campaigns will be planned cross media, and agencies will demand better measures of overall reach and effectiveness Audit bureaux that focus solely on print will shrink and may become unviable, as shown by the recent closure of Denmark’s ABC. Bureaux can widen their activities to cover emerging media such as events, OOH, mobile apps…. They must also become part of the digital conversation in their markets and develop services relevant to digital advertising 41: What will it take to adapt to the digital world? Bureaux will need to develop new skills and capabilities: How to collaborate with digital stakeholders How to partner with complementary research & auditing bodies Sharing best practice and learning from audit bureaux worldwide Streamlining the costs of core print audits Making frequent updates to digital media standards Bringing in new skills, and developing new products and services 42: The role of IFABC IFABC is well placed to help agree global measurement standards, and also to build relationships with global media players. IFABC can also assist members by sharing best practice, building the data and knowledge base and developing new joint services. 43: Next steps Do use the full report to understand more about media and advertising trends and the views of buyers. Learn about which bureaux have developed new products and services and collaborate with them to uncover best practice. In your local market, consult with agencies, broaden your stakeholders and consider rebranding if appropriate. Raise your profile in the local media industry – perhaps find a figurehead to speak and network? Work with your publishing clients as they develop digital revenues; speed up processes and streamline costs Then grasp the digital opportunities where possible in your market, and partner and collaborate to make progress. Carolyn Morgan 17 Sep 2014