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Tough times, but media executives are upbeat
Sunday, January 04, 2009 By Catherine O’Mahony
Larry Bass

Chief executive, Screentime Shinawil Productions

The television sector in 2009 will suffer from a downturn in advertising spend which was already down 30 per cent at end of 2008. This will reduce the revenue available to all broadcasters for programming but, hopefully, this will not mean a dramatic reduction in home content on Irish screens.

‘‘We, as producers, will have to work harder and be creative not only on screen but also in resource management. The economic situation may force some long-overdue consolidation in the Irish film and TV sector. Bigger, stronger, but more efficient companies will help protect jobs and generate more international business and grow IP revenue for Ireland Inc. In a knowledge economy, TV and film can create huge revenues and jobs.

‘‘The TV format sector - a format is a franchise, branded programme idea as a saleable asset, eg The Apprentice, X Factor etc - is a €3.5 billion industry annually.

‘‘We hope to build on our reputation for producing high quality shows, including Popstars, You’re A Star, The Apprentice and our forthcoming series for RTE, Dragons’ Den. Plans are already in place for the second series of The Apprentice. More importantly, our ‘slate’ of new original programmes with export potential is healthy and will open up new markets. Our drama output is now finally generating some interest internationally.

‘‘As revenues fall in other markets, the requirement for co-productions and shared resources will increase the value of Irish partners for international projects.

‘‘We also will increase activities in Britain, following the successful adaptation of global formats into Ireland. We have acquired the rights of a number of global brands for Britain and Ireland. The creator of The Apprentice, Mark Burnett, is working with us on a major series in Britain this year.

‘‘The eternal optimist in me sees an upturn in the third quarter of 2009, as the key autumn schedule will drive audiences and advertisers looking to grow market share after a slow start and a troubled first three quarters of 2009. A significant growth in new channels will offer opportunities for the content producers.”

Ruth Guy

Director of fundraising and marketing, Barnardos

‘‘What will 2009 bring? As of now, the answer is unclear. It is not looking like a great year for anyone but it will be particularly hard for the not-for-profit sector. Why? Because more than ever our services are needed. Barnardos has already seen the signs of increased hardship in the communities we work with, and the impact that is having - particularly on the children. We are facing the dilemma of increased demand without increased funding to deliver those services.

‘‘2008 saw a downturn in fund-raising income right across the sector. Many charities saw a decline in corporate funding and increased attrition rates in their individual donor databases. Other fundraising activities simply no longer worked in terms of raising income, and were stopped.

‘‘The harsh reality is that, in order to do their work, charities have to fundraise. In a recent survey, 83 per cent of Irish adults said the main reason they gave to a charity was because they were asked.

‘‘If we don’t ask, we don’t get. It is as simple as that. ‘‘We have always had tight budgets and have to work hard to compete in a crowded charity and media market. The coming year will be no different in that respect.

‘‘The irony is that our budgets should go further as competition increases and prices drop.

‘‘Everything Barnardos does in the public domain is aimed at achieving a number of key targets: to educate and inform people about the issues children and families we work with are facing; to explain the work Barnardos does and what impact it has; to encourage people to financially support our work

‘‘We measure success on awareness, understanding and ultimately - and most crucially - income received. It is no different than any other organisation, apart from the fact that the end result is not increasing market share but funding the delivery of services that change lives.

‘‘We rely on the people who support us to continue to deliver the services we do. We will continue to go out there and, no matter how bad things get in 2009,we will keep asking because now more than ever we need that support.”

Ruth Guy was marketing magazine’s Marketer of the Year in 2008

Cathal Gaffney

Managing director, Brown Bag Films

‘‘I’m almost afraid to say it out loud, but I’m actually optimistic about the coming year and expect to maintain growth for our business. This is partly because my brain just isn’t programmed for pessimism, but I’m also quietly confident that our development ‘slate’ of children’s programmes will progress into production.

‘‘The Celtic tiger never gave Brown Bag a look in, so I hope this recession will pass us by with similar disinterest.

‘‘We have 53 full-time staff in Dublin and Toronto and one of my main concerns is that a wage bill of this size between major productions is a huge drain on resources. Last Friday, we delivered our 52nd episode of Olivia to Nickelodeon US and we are half way through Noddy In Toyland for FIVEUKandTF1 in France.

‘‘As most of our business is export-based, the rising value of the euro has been a big problem. Thankfully, the Irish film and TV tax incentive (Section 481) was significantly improved in the government’s recent Finance Bill. Unfortunately, unless you are a public service broadcaster, there was a missed opportunity to improve on the independent films’ landscape with the bill.

‘‘RTE’s director-general recently announced that there would be no job cuts in RTE. Their cost cutting is to be directed at the independent production sector. Screen Producers Ireland estimates that 45 per cent of jobs in the independent sector could be lost, or at risk, as a result.

‘‘Even before these budget cutbacks, RTE only ever spent less than a single percentage of its IPU budget on animation, and that sector now expects to be marginalised further.

‘‘Our commercials business has definitely been quieter compared to the same quarter last year but we are continuing to reinvest and expand our commercials division. We recently employed a new visual effects director from Venezuela - investing in people seems a safer bet than investing in shares or property.

‘‘Over the years we have also invested in our own postproduction facilities and, at times like this, being self-sufficient and not dependant on external suppliers gives us some peace of mind.

‘‘This year, we will celebrate 15 years in business and over those years there has been a lot of belt-tightening and mini Brown Bag recessions. The only difference this time is that the entire country will be feeling the pinch together.”

Dermot Hanrahan

Managing director, Electric Media, radio investor

‘‘Usually, the advertising business is the ‘canary in the coalmine’ when it comes to economic downturns. It is the first area of expenditure to take a hit. It’s discretionary expenditure and it’s easier to cut the ad budget than to fire someone. It can be done quickly. ‘Maybe I can coast without advertising for a little while’ is the seductively simple reasoning and, for a while, it might even work - but not for long.

‘‘Eventually, businesses realise that the competition for shrinking customer expenditure is more intense now than in the good times. Better value is needed to coax recalcitrant customers out of their shells, but there is no point having a more competitive offering if the public does not know about it.

‘‘The need to highlight your brand and offering is now greater because of recession, not less. Turning off your marketing megaphone now is a serious business mistake, not an easy saving.

‘‘Most people figure this out pretty quickly, so while the ad business takes the full shock of downturn in the short term, it tends to recover before the general economy, as advertisers try to take advantage of their competitors’ relative silence. Ultimately, everyone has to trade - and advertise - their way out of trouble.

‘‘The two sectors in which I’m involved, radio and online, look well positioned to handle the downturn better than the more expensive traditional media.

‘‘Radio expenditure in 2008 held up well and is expected to have a degree of modest growth in 2009, especially from ad agency business. Radio listenership is still at a particularly high level in Ireland, by European standards. It is much less expensive than national press and TV and allows advertisers to maintain brand awareness at low cost. It is still the least expensive primary medium and the proliferation of radio stations, national and local, and the attendant competition give advertisers access to great value.

‘‘Online is still the fastest growing medium and it will continue to grow strongly. It is clear that we are all spending more and more of our time at our PCs and online has gone from being an optional extra to being the medium which will eventually matter most. Marketeers who don’t use it are becoming rare, and are usually confined to decision makers above a certain age. Growth forecast for 2009 range from 15 per cent to 20 per cent, despite recession.

‘‘The medium is the most accountable, measurable and increasingly innovative as we see the decline of old banner ads and the growth of newer, more engaging, video-led ad formats. Again, the lower cost of entry in online advertising positions it better than most for the year ahead.”

Gary Mullan

Chief executive, Prosperity Recruitment

‘‘We have seen a tail-off in demand from certain sectors since the end of September 2008, particularly in general marketing, print design, and to some extent, agency.

‘‘20 0 9 will see major changes for advertising agencies. Some have already taken the hard decisions and been forced to lay off staff, and many expect several agencies to come under pressure, leading to mergers between some of the smaller players - and unfortunately some may be forced to close their doors.

‘‘This slowdown of course has an upside, the easier availability and falling cost of media space will allow smaller, challenger brands step up a level and gain broader exposure across mainstream and online media. This could see the category leaders, the big boys, review their situation and commit to a bigger spend themselves in order to protect their position.

‘‘Overall, advertising agencies will become more flexible and efficient. The agencies that can react and change quickly to the changing circumstances of the coming months are the ones who will come out of this healthier. As one creative director said, ‘those with the appetite for it will survive’.

‘‘Prior to this recession, Prosperity had anticipated the current decline in demand for traditional marketing personnel, as we had experienced this in the downturn in the early part of the decade. However, we have been working with the online marketing sector from its inception in Ireland, and this has cushioned us from declines in other sectors. While forecasts for online growth for 2009 have been revised downwards across various statistics, there will still be considerable growth.

‘‘We are seeing this in a consistent forward demand for cert a in online candidates, particularly for Media managers with an understanding of organic and paid search, affiliate and e-mail marketing, and with specific technical skill sets. We are also seeing an increasing demand for personnel who will work under the media manager such as SEO specialists and project managers.

‘‘We have also seen a sharp decline in demand for print graphic designers, but the demand for web/interactive designers remains strong.

‘‘We have scaled back our activities in recruiting for more traditional media skillsets, and have increased the focus on our digital side. We are anticipating continuing growth in this sector throughout 2009, particularly as online media are more targeted and offer measurable return on investment. These attributes are attractive to media planners in a constricting economy.”

Michael Killeen

Managing director, Dialogue

‘‘This will be the year when marketing folk get to stand up and deliver. Gone are the days of the ‘nice ad, buddy’ pat on the shoulder. Marketing can make a difference during tough times. Agencies and marketing departments will be under the spotlight like never before. We need to keep cool heads in the years ahead. The result for our discipline will be respect. The result for the marketer could be an invitation to sit at the boardroom table.

‘‘In 2009, business will embrace strategies that cement longer-term security. Chasing short-term profit has gone out the window. Sobriety is the name of the game. This will start off by locking in our best people: staff who understand the benefits of - and are capable of- delivering long-term strategic programmes rather then short-term tactical efforts. Ring-fencing best customers will be the number one marketing initiative across every business in Ireland.

‘‘For those who have not got on board, this race is already well under way. Customer relationship marketing initiatives have been, and will continue to be, approved. Anything that focuses on long-term survival will be ticked for investment. Agencies will need to position proactive initiatives under this heading to have any chance of getting a seat at the table.

‘‘The past decade has been dominated by acquisition efforts, to the extent that consumers are fed up being sold things they simply don’t need. We see a major budget shift, as much as 30 per cent, in favour of retention.

‘‘Retention is the new acquisition. Acquisition will be driven by word -of-mouth experiences from these retention programmes. Our last quarter in 2008 was the best quarter in our 15-year history. The movement from acquisition to retention is well on its way. The movement from mass to direct follows. Every cent spent has to be justified.

‘‘Most clients are understandably uncertain as to plans for this year. There is a general ‘we simply don’t know’ response. I expect a fall-off in ATL (‘above the line’ promotional spend).How significant, and for how long, will be dependent on the general confidence in our political and corporate arenas. I believe that ATL budgets could drop as sharply as 20-25 per cent. Sponsorship, events and entertainment aimed at mass acquisition will be curtailed. I can confirm more direct customer communications. That’s not me speaking, that’s clients confirming.

‘‘Finally, the general consensus is that it will be a tough year. Rotation of 2008 creative will ensure some layoffs in our sector. Agencies without financial cushions will cut back, merge or unfortunately sink. The freelance market could flourish but it will experience the taxi man phenomenon - get ferociously competitive with new arrivals. The end result may be a lack of inspiration which will result in bucket loads of bland communications.

‘‘Marketing has been talking about being taken seriously for years now. It’s high time we walked the walk.”

Aileen O’Toole

Managing director, online consultancy Amas

‘‘Now for a blast of optimism, but tinged with realism. While 2009 will see marketing budgets slashed and media companies and agencies retrench, it looks set to be a watershed year for digital marketing and communications in Ireland.

‘‘It will be the year when more clients will shift advertising spend online, when social media and emerging platforms will become an integral part of the communications mix and when business owners take to DIY online campaigns in greater numbers. While digital has been the ‘also ran’ in many a campaign, fighting for budget and a client’s attention against TV, radio, and press and a galaxy of other media choices, in 2009 it will begin to move centre stage.

‘‘These bullish predictions are based on hard evidence. Firstly, internet usage has reached critical mass with over a million broadband subscribers. Irish audiences are absorbing richer online content in greater numbers, streaming TV shows from the US, watching or publishing videos on YouTube, making connections on Facebook and other channels, as well as researching and buying online.

‘‘Secondly, there’s value for money, the mantra for these recessionary times. Online is the lowest cost channel, capable of delivering sales, leads, customer engagement or a range of other objectives at a fraction of the cost of traditional campaigns. Free or low-cost tools have cut website development and digital campaign costs. Such tools are not just for geeks. Increasingly, they are powering the websites and the campaigns of leading international brands.

‘‘Thirdly, there’s the stellar brand of 2008, Barack Obama, whose strategic use of the internet to deliver votes and campaign dollars has been a wakeup call to those in charge of marketing and communications budgets. They are looking to the Obama campaign for inspiration and ideas. The Obama online strategy was a clever combination of old-style campaigning and communications meshed with the use of new tools and marketing techniques. All of this was built around a simple, yet powerful, message - change.

‘‘The outlook for digital is overwhelmingly positive. In more mature online markets, the US and Britain, marketers are saying that they will be increasing their online budgets, but the rate of increase is tapering off.

‘‘In Ireland, we’re still playing catch up. Amas research among members of the Marketing Institute of Ireland points to a similar pattern. Just over half of the sample said that they are spending 10 per cent or more of their budgets online.

‘‘It would be easy to get carried away with digital’s growth and its potential and to ignore the scary economic times we live in. So, a reality check is needed. Inevitably, tighter budgets will impact on digital businesses and projects will get canned or curtailed. Digital businesses will collapse, will be restructured, or will be consolidated.

‘‘The sector in Ireland is fragmented, making it difficult for clients to buy services or differentiate suppliers. There is insufficient research to enable clients and agencies to buy with confidence.

‘‘From the client side, the challenge is to move digital from the tactical to the strategic. Clients need to exploit digital but must be confident of the role, the benefits and the return on investment. Also, they need to align digital to their business or organisational strategy.

‘‘Digital is a disruptive force in the worlds of marketing, advertising and communications. It does not suit the traditional models of agencies, publishers and other established players. For them, also, 2009 will be a watershed year but the prognosis is more negative.”

Ed McDonald

Chief executive, Association of Advertisers in Ireland

‘‘Advertising must go on, even in a downturn. Sure, people will do things differently and spend differently but they will also need to be made aware of what companies are offering and how their products may benefit or be useful to them.

‘‘Our society can’t afford not to keep moving on, however tight the economic situation might be. People will change their needs assessment and their spending practices and what they buy. And businesses will change the way they do things, change to adapt to the changing environment.

‘‘Change is ever present, in good times and in difficult times. As the Greek philosopher Heraclitus said over 2,000 years ago: ‘The only thing permanent is change.’ And therein is a lesson for everyone.

‘‘Advertising spend and the approach to advertising will be different this year, compared to 2008 and especially preceding years. Some of the big ad spenders, especially in the property world, have vanished from the marketplace. This year will provide an opportunity for businesses to reassess their approach to advertising, to assess what is the most effective way of getting best value for their ad spend.

‘‘That will involve spending more wisely and more effectively. In tighter economic conditions, it is vital that businesses look on their marketing and advertising spend as an investment rather than as a cost. Sure, it’s a cost, but it is more importantly an investment as essential as any R&D investment or capital equipment purchase or property lease.

‘‘Business will put more emphasis on value and benefits - value to the customer and benefits to the customer. Different products and services will fare differently. Some will be essential and still needed. Others will be discretionary and therefore desirable, even if not essential. That is the essence of market segmentation, and that is why advertising spend will be more targeted in 2009.

‘‘Advertising and promotion are essential activities for any business. In this regard therefore, 2009 will be an interesting year in terms of legislation or regulation that affects advertising and promotion. The Broadcasting Bill will become law in 2009. It contains a provision to allow for the banning of advertising of certain foods and beverages. By any stretch of the imagination, the notion of banning is pretty draconian.

‘‘Indeed, it would seem that at a public policy level there is some sense of contradiction in this, if on the one hand you can have one government department or state agency encouraging business development and job creation, and yet have another department or agency suggesting that such a company’s product cannot be advertised.

The ongoing debate on obesity has raised the question of restricting the advertising of certain foods and drinks, even though some say that inadequate physical exercise, lifestyles, and even genetics, are likely also to be significant elements in the battle against obesity.

‘‘Watching TV or playing Nintendo could therefore be seen as part causes of the lifestyle that contributes to obesity. Maybe there will be arguments for controlling advertising of those products too. Yes indeed, 2009 will be an interesting year for advertising.”

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