Why SMI won’t fly

StopPress recently published a story about the arrival of Standard Media Index (SMI) in New Zealand. As is often the case with the launch of a new product or service, the announcement came with much hyperbole, including that it “will deliver the most comprehensive view of New Zealand’s advertising market when it launches”. The article also referenced the annual ASA numbers, which are provided by each industry sector, and the challenges faced by Nielsen’s AIS product as traditional media measurement struggles to adapt to the complexities of media creation, deployment and consumption. 

The piece described the ‘elephant in the room’ as direct advertising, which isn’t covered by SMI. It is true that some media enjoy a much greater proportion—and growing—of direct advertising than others. Magazines are a case in point and these relationships often centre on ‘content’ partnerships rather than display advertising. However, this is an over-simplification as marketing dollars are progressively siphoned out of traditional media agencies by a growing community of sophisticated and interventionist marketers working with a range of specialist service providers, and media owners directly.

In this regard it seems to me that SMI’s most useful service will be to measure the long-term decline of traditional media agency share of wallet and prove that they are like polar bears clinging to their melting piece of ice. To claim, as SMI has, that the expenditure of 15 media agencies in New Zealand will provide a “comprehensive view of New Zealand’s advertising market” lacks credibility. A recent conversation with a senior leader of one of New Zealand’s largest media agencies suggested that because they had seen a double digit decline in magazine advertising spend then that was surely a reflection of the market. This is clearly not the case based on the most recent ASA figures, which actually showed an increase YOY. On top of that, our business (I do not believe we are unique) generates around 20-30 percent additional client revenue from various content marketing properties in addition to what is captured in the ASA data and Nielsen’s AIS. And this most certainly won’t make it into SMI.

The exception to this will be multinational advertisers who have progressively withdrawn local resource and local creative. These advertisers appear to still largely engage with the local market based on how skinny the margins can be negotiated with their media agencies and a race to the bottom in terms of the relationship with media owners. I expect SMI will give the masters in Australia and further afield a stick with which to whack us with and will place greater pressure on the need to change the dated agency commission regime. As media owners, what are we paying agencies for? 

Despite their rhetoric that suggests otherwise, the media agency model is still largely based on trading in traditional media and the commoditisation of it. SMI looks to be a measure of who has been able to screw the media owners the hardest based on cost, not effectiveness, ideas or even value. Given the rather two-dimensional nature of this dynamic it is no surprise that the silos and traditional demarcations that have defined the media market are collapsing as marketers explore other, more effective options. 

The descriptor ‘traditional’ has been used a great deal over the last few years, particularly following the development of digital channels. And it’s largely been used negatively to suggest that ‘old media’ will struggle to adapt and survive. I don’t believe there is such a thing as traditional media. There is just media and progressively the distinctions between earned and owned media are diminishing, along with the weight given to paid media by marketers. It is this trend that makes the current crop of measurement tools anachronistic and in that regard SMI seems equally so.  

  • John Baker is a publisher at Tangible Media and chair of the Magazine Publishers’ Association. [email protected]

  • This story originally appeared in the July/August edition of NZ Marketing.

  • The opinions expressed here are the author’s own and not necessarily those of the MPA.

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