People are accustomed to paying to remove the ads with services like Netflix and Spotify. Will ads just become a tax on the poor? Will free-to-air TV still exist in 10 years?
Alistair Jamison, chief executive, Starcom Mediavest Group
I think the first thing I would say (politely) is that I am not entirely sure this hypothesis is right. I don’t think that in the case of Netflix people are paying to remove ads. I think they are paying for access to what they perceive to be quality content and it just happens to be a by-product that is delivered without ads. In the case of Spotify, I again think people are paying for access to content in a format they want it, not to avoid what is in reality a pretty light load of advertising.
Conversely I think there are also examples where consumers pay for content and accept it comes with ads (i.e Sky). That is not to say that I don’t think the consumer mindset is that they would prefer to avoid ads, but I don’t think the primary driver for uptake of any of the ‘new’ distribution services is ad avoidance...it’s all content driven.
So coming to your question, will free-to-air TV still exist? I think it will still exist and there will still be a need for ad- funded content to be available. It will continue to evolve and
the delivery mechanisms will change but I think free-to-air will exist. Granted what we consider free-to-air today may look different and I suspect the FTA broadcasters will have elements of the pay model in their businesses, but some content will be available free-to-air.
Can Sky survive without sport?
Sean McCready, co-founder and owner, MBM
Unfortunately the answer is probably not. Live sport is Sky’s unique content offering. It’s the programming that can’t be easily replicated or substituted.
In fact, the question really is, can Sky survive without rugby? The top 30 Sky programmes in 2018 for the all important 25-54 demo are mostly Super Rugby with a few cricket and Warriors games to make up the numbers. So the crucial contract for Sky is the Sanzaar rights that expire in 202o and covers Super Rugby and The Rugby Championship. This deal is much more important than the Rugby World Cup rights.
Regular, ongoing competitions like Super Rugby and NRL are the backbone of Sky’s offering. Sky needs a strong Super Rugby competition which in recent years has lost some appeal with the expansion to new teams (from Argentina and Japan). It is only held up by the New Zealand teams performing exceptionally (aside from the Blues) and great local derbies. The Super Rugby format is weird with a month-long break before the semi-finals when the All Blacks play a touring side. And now there’s talk about South African sides potentially leaving Super Rugby to play in a European competition. Super Rugby has a few problems.
So sport is less substitutable than other content. An All Blacks fan needs to see them live and won’t get the same buzz watching a different sport instead. However, a person that likes HBO drama Westworld could probably live without it and watch a plethora of other great dramas or find a way to watch it illegally. Non-live sports content is just not as sticky, and without a monopoly on key sports, Sky ends up competing on general programming where Netflix and Amazon offer consumers amazing value.
Sky profits remain strong and they are effectively the only local broadcaster making significant money out of TV. However, the latest results were on the back of cost control rather than subscriber revenue growth, and the trend is more people moving to online subscription services, primarily Netflix. There’s tough times ahead and sports rights remain the profit engine for now.
Will there be a consumer uprising against data collection and targeted advertising and a plateauing of digital media? Or is it just too convenient and ubiquitous?
Richard Thompson, partner, Future State Consulting NZ
It’s fair to say that digital media is facing some significant teenage angst at the moment. However, most of the current issues are growing pains for a relatively immature industry. As these issues are addressed, we will see renewed momentum with a better, more transparent model for both consumers and advertisers.
We all have a right to know how our personal data is being used and clearly the global digital players have overstepped the mark in areas here. The new GDPR regulations in Europe have started to address the data issue and will over time begin to rebuild trust for consumers. If we understand how our personal data is being collected, how it’s being used and can see value in return then we can move forward with confidence.
Digital media continues to have the ability to strip away audience wastage and provide advertisers with the right audiences more accurately and cost-efficiently than ever before. Consequently, the foundations remain strong and it will continue to grow as the dominant channel for both consumers and advertisers.
What’s keeping you up at night?
Nicky Greville, general manager, Y&R Engage
The massive unlearn.
I’m sure we’ve all seen the alarming stats about automation and job loss, the numerous articles that outline which demographics will suffer the most and those that will become indispensable to businesses of the future. Coupled with ongoing global discourse around transparency, brand safety, GDPR and more, what keeps me up is the question; are we unlearning quickly enough?
By this I mean has our wider industry of marketing and communications done enough to ensure we really, truly understand the new digital world? Have we been through a massive unlearn; the process whereby we forget everything we thought we knew to take on a new way of looking at the world? Do we understand the language, the technology, the systematic ways of operating and thinking?
And are those of us that are privileged enough to be in leadership positions, ensuring that this new way of operating is being taught from the ground up; are our universities and schools on board? Will the pipeline of people coming to our industries continue as almost anything becomes accessible to digital natives?
I’ve always loved that our roles in media involve rethinking every communications option on a daily basis and I know that the majority of the broader industry agree. However, I wonder if each and every one of us is aware of just how much we need to do differently to tackle our digital futures.
Will live gaming become a major sporting event - both in real life and as broadcasts - in the next five years?
Richard Last, director of sport, Sky
Yes, I believe so.
About a year ago, I started to read the Bleacher Report articles around eSports. It was obviously growing, had a huge audience and big money was starting to flow in terms of sponsorship and live events.
Many of the opportunities offered by eSports are online and international in their scope. However, as the number of people enjoying gaming continues to grow, it is starting to pull in a more mainstream audience. With local content being produced for Sky by Let’s Play Live here in New Zealand and our international partners such as FIFA and F1 running their own eSports competitions, the sport will only continue to grow online and on Sky Sport.
At the end of the day, Kiwis still like to watch themselves compete no matter what the activity – rugby, dancing, cooking and now... eSports.
Could concerns over too much tech see advertisers move their spend back to print?
Stuart Rutherford, managing director, Zenith New Zealand
Despite some growing industry speculation about a slowing of digital advertising budgets, I see no evidence that advertisers are shifting budgets away from online. By contrast, its share of global advertising expenditure continues to rapidly rise, forecasted to hit 44.6 percent of global ad spend by 2020.
The concerns we have seen from large FMCG multinationals and others relating to brand safety and corporate responsibility are valid and yet they simply will not stop the tech and digital juggernaut, and we certainly will not see them shifting large spend back into traditional print channels. Advertisers’ progressive use of data, tech and digital insight within the consumer journey has been proven to link brand experience with brand growth.
And yet while tech and digital players continue to provide more data and audience targeting than we know what to with, a trend over the last couple of years has seen brands use digital in a more traditional balanced manner, e.g. a shift within the likes of Facebook to reach and frequency to gain broad reach alongside highly targeted buying.
Influencers. Are they all they’re cracked up to be? And what needs to happen for them to become more legit?
Fleur Skinner, general manager, MKTG
Personally, I believe the hype. The influencer marketplace is growing exponentially in New Zealand and around the world; Analysys International has projected the Chinese influencer economy alone will be worth over $15.5 billion this year. In terms of legitimacy, I think great strides have been made.
Helpfully, the Advertising Standards Authority has made it very clear that paid endorsement requires disclosure. What we’ll see next is influencers looking to maintain their own brand value by selling ‘access’ less frequently; they will look for natural affiliations and long-term partnerships. And they will start making and marketing their own products.
How will voice technology change the way information is served up? And how will advertisers use it? Will this trend render display advertising obsolete and make it even harder for media to make money?
Samantha Osborne, managing director, Mindshare
We stand on the cusp of a fundamental shift in how we relate to computers. Over the past 50 years, we have been on a journey that has simplified our modes of interaction, from punch cards to keyboard, mouse and then touch. Each step has made engagement with technology simpler and more natural, leading us to perhaps the simplest and most natural interaction mode of all—voice.
Voice has been given further impetus by the ambitions of GAFA (Google, Amazon, Facebook, Apple) to control their own consumer platforms. Just as Google bought Android
so it would have some control of mobile as a platform, so Amazon developed Echo and Alexa to retain influence over the development of voice and its impact on search and shopping.
It seems unlikely that the interruptive model of paid advertising will translate easily to voice. Since a primary expectation for using voice is a more streamlined experience, the insertion of paid-for ads directly into a conversation with an assistant will jar.
With the interruptive ad model in question, brands should consider the following opportunities if they want a share in the significant forecast of sales (predicted) to be driven by digital assistants:
A key challenge in a world intermediated by voice assistants will be ensuring your brand or content is chosen by the assistant. Algorithm optimisation will become the new SEO
As voice capabilities spread to new contexts, brands should consider adding voice interactivity to their touchpoints
Brands that develop truly useful content have a great opportunity to engage in direct communication with their consumers
Speaking directly to a brand appears to strengthen emotional relationships. Brands have a great opportunity to define their own voice
Although we are moving to more human interactions with technology, voice vs the physical click, the role of display advertising is still important in the ecosystem of a brand – visual recognition of a brand or message is still one of the key benefits we have as humans. What will become apparent very quickly is how brands (and therefore their advisors) work with the technology players to develop natural integration, and therefore show their worth.