Traditional media is going through a painful adjustment, but there are bright spots in the gloom.
Warner Bros Discovery rocked the media industry in late February, when it announced that its news service Newshub is set to close as part of a proposed restructure of its free-to-air business in Aotearoa. The 6pm Newshub bulletin has been a nightly staple of New Zealand television for more than 30 years, since it began as Three News back in 1989.
Days after the Newshub announcement, TVNZ dropped a bomb of its own. After reporting a net loss of $16.7 million for the six months to December 31, 2023, the broadcaster revealed plans to axe iconic consumer affairs show Fair Go and investigative current affairs show Sunday, along with the Midday and Tonight news bulletins.
The core challenge faced by mainstream media companies is falling revenue from their traditional channels, with digital revenue rising but not quickly enough to compensate. Yet if you think now’s a good time to negotiate some hard bargains with desperate media providers, think again.
On supporting media
Managing Partner of media agency Together, Rufus Chuter, says advertisers should be supporting local media. “As agencies, we have a responsibility to develop the most effective plans for advertisers’ businesses, while also highlighting those plans’ wider environmental or societal impact. My view is that healthy brands build healthy businesses, and healthy brands need healthy, trusted local media contexts to grow in. This is proven, so although there may be some that perceive a short-term opportunity in a struggling local media market, mid- to long-term, it’ll be very damaging for local brands and therefore for local business.”
Chuter says the audience fragmentation both media businesses and advertisers are dealing with isn’t new – it’s a defining feature of the past 10 to 15 years of media.
“We’ve always had to build reach cumulatively based on audiences and objectives, as well as take into account quality of advertising exposure and recency. It just means advertisers and agencies have to think harder about how to build reach across platforms through tactics like media stacking, dayparting and audience targeting. There are still plenty of excellent mass-reach media opportunities in New Zealand – it just requires more craft than banging out spots into linear TV.”
Chuter adds that the quality of content should be considered by advertisers alongside the raw viewership numbers. He says there’s an “interesting discussion” around at what point reach across low-involvement, low quality contexts becomes less valuable than slightly lower reach in high-quality and high-engagement contexts.
“There’s been excellent dissection of the role of mass reach in building brands and business, but less on how that reach is built and whether a slight compromise in daily reach for quality and engagement of that media exposure is quantifiably more valuable. This is going to differ by category and level of purchase involvement, but it’s an important debate, given the increasing daily reach of social and digital platforms.”
Tête-à-tête with tech
One of the issues publishers point to is competition from big tech companies like search engines and social media platforms that they claim are stripping away their ad revenue and building their own businesses on the back of the hard work of Kiwi newsrooms. New Zealand’s most-read news publisher is Stuff Group, which reaches 3.377 million Kiwis every month, according to the latest Nielsen CMI Readership results. Its owner and CEO Sinead Boucher is also Chair of the News Publishers’ Association and has been at the forefront of the industry’s battle with big tech over the use of locally produced news content.
The Fair Digital News Bargaining Bill, introduced under the previous government, provides a mechanism for publishers to negotiate with tech giants over the use of their content. The recent news about Newshub and TVNZ has added urgency to the industry’s efforts to get the new National-led government to keep the bill alive.
Boucher says there’s “a lot of noise” about the bill. “We want to be clear about what it is: just a mechanism to enable a negotiation process. It’s nothing more than that. And it’s to address the obvious power imbalance between the publishers – and there are some much smaller publishers than us – and the big tech companies who use our content as the foundation of their own businesses.”
Not a tax
The proposed law is “not a tariff, not a tax, not imposing a fee”, says Boucher. “It’s just a mechanism [that means] you must come to the table, you must negotiate and agree on fair value. We might think that value is a dollar and a tech company might think that value is 10 cents, and then if we can’t agree, there’s an independent arbitrator who’ll look at it. I don’t think anyone, tech company or media company, should have anything to fear from that.”
Boucher says international tech companies make “well north of a billion” in ad revenue from their New Zealand operations each year and are unlikely to exit the country if the Fair Digital News Bargaining Bill passes. “But I do see that Facebook behaviour in Australia, in which they did block news. [It was] a display of monopoly power.”
Google, which accounts for around 90 percent of global search engine traffic, says it doesn’t support the Fair News Digital Bargaining Bill. “We’re proud of our ongoing investments to contribute to a sustainable, diverse and innovative news ecosystem in Aotearoa, including through our commercial deals for Google News Showcase – representing 50 local publications – and through collaborative programmes designed to help strengthen quality journalism, such as digital training for journalists and for the digital transformation of news businesses,” says Country Director of Google New Zealand, Caroline Rainsford.
“As outlined in our recent submission to the government select committee, Google does not support the Fair News Bargaining Bill, as we believe it would not lead to fair outcomes for New Zealand citizens, New Zealand news organisations, nor for digital platforms operating in New Zealand. We are committed to continuing to work with the government and industry and welcome the opportunity to discuss this proposal further to share our concerns.”
AI overload
Boucher says there are other tech trends affecting news providers beyond what’s covered in the bill. “I think we’re already starting to see we’ve reached the end of one era on the internet and we’re in the beginning of a new one when all the rules we probably thought were true from the last 10, 20 years are going out the window.”
She says there are lots of new challenges coming through in relation to search, and social is changing too. “We’re also seeing, only a year after launch of ChatGPT, a proliferation of AI-generated content drowning out the internet. You can search for anything now, and you get a whole random list of weird site names with auto-generated content. “For news media, there’s a real opportunity in there, because journalism is about investigating the facts and reporting what’s true, to help people identify what’s real.”
Boucher also points to the recent demo for Sora, the video-generating software being developed by OpenAI that’s due for release later this year. “It just shows you we’re right on the cusp of people being unable to identify what’s real and what’s fake,” she says. “For a news media company committed to truth and facts and ethics, there’s a need for us to be the antidote to all the fakery out there. There’s an opportunity in that for us as well, because for our audiences, we need to be that island in the sea of slime where people know: ‘I can trust that it’s real and true’.”
Boucher says Stuff must also make sure they’re telling their commercial partners the right story about who they are and what they do. “News media sites are real things happening to real people in the real world, and audiences have a huge thirst for that. Your brand is in a safe environment rooted in reality and trust, versus out in the Wild West of the internet, where now your brand is in among the fake, the maligned and the scams.”
Neon adds ads
One segment of the media market that has benefited from new technology and changing viewer habits is subscription video on demand (SVOD). Sky’s Head of Sales, Ben Gibb, says Sky has a unique opportunity to launch advertising across its streaming platforms – Neon, Sky Sport Now and Sky Go – and collectively reach more than 750,000 Kiwis a week.
“We prioritised the launch of advertising on Neon, becoming the first Subscription Video on Demand platform to incorporate advertising locally, providing a new, premium digital opportunity for advertisers that hasn’t previously existed in the New Zealand market,” he says. “Although this has been a first for Aotearoa, globally we’ve seen a real shift to advertising on SVOD platforms. Clearly, there’s demand, and we’ve been fortunate to learn from international models.”
Neon’s Basic with Ads plan delivers 45 seconds of pre-roll before the show starts, while its Ads on Pause allows viewers to initiate a pause in playback. For Neon’s Standard and Annual plans, Sky has introduced only Ads on Pause.
“This means that uninterrupted viewing for our customers continues because the ad loads remain low,” says Gibb. “When we compare this to BVOD [Broadcaster Video on Demand] platforms, for example, they often run up to eight to 10 minutes of advertising per hour, much higher than 45 seconds of pre-roll – so in a nutshell, the viewing experience remains premium for our customers, while also delivering a very high attention ad environment for advertisers. The win-win here is that consumers have the choice to continue to receive uninterrupted viewing or pay a little less for a small amount of advertising, ensuring a positive viewer experience, while also unlocking our streaming audience for advertisers.”
YouTube, which was recently announced as naming sponsor of the NZ Marketing Awards, is also operating in the subscription space with YouTube Premium, which allows ad-free viewing. “As YouTube continues to grow, we’ve learned that different viewers want to watch different things and in different ways,” says Rainsford of Google, which owns YouTube.
“We’re constantly working to improve our product offering for users, creators and advertisers. With the new, ad-free subscription service, we’ll be offering even more features that some users are willing to pay for, like an ad-
free experience and offline playback. By meeting the needs of a broader range of fans, we believe we can increase user engagement on YouTube.”
The big screen
Despite the growth of subscription video streaming services, the attraction of seeing a new movie on the big screen remains. New Zealand cinema had a strong summer period, with 1.27 million admissions nationwide, thanks to a host of popular blockbusters.
It continued the momentum with the arrival of science fiction epic Dune: Part Two, which delivered $1.8m at the New Zealand box office during its Thursday to Sunday opening weekend. This made it the biggest opening weekend since ‘Barbenheimer’ (the double launch of Barbie and Oppenheimer) in July last year.
NZ Sales Director of Val Morgan Cinema, Matt Tremain, says Barbenheimer was “the undisputed biggest cultural event” of 2023.
“What we saw was two complete opposite films on either end of the spectrum – drama and comedy – releasing on the same day, [prompting] audiences to start that whole Barbenheimer movement. The results we saw off the back of that showed the power of cinema to dominate those cultural conversations. Barbie went on to become the fifth-biggest film ever in New Zealand, and Oppenheimer was the second-biggest drama.”
Tremain says another trend in the past year had been a strong female skew in a lot of the content and audiences. “We witnessed an abundance of compelling titles that featured real strong female characters, and that really played a pivotal role. If you go back and look at the summer period, of the top 10 films, eight of them skewed towards female audiences.”
From an advertising perspective, Tremain says one of the things that sets cinema apart is the high level of attention from audiences compared to other platforms. Val Morgan Cinema collaborated with Dr Karen Nelson Field’s research company, Amplified Intelligence, to develop a world-first attention-based model for cinemas. Tremain says: “Some of the key [takeaways] are that cinema captures much more undivided attention than any other media and has zero levels of non-attention, which means you’ve got an unmatched audience connection. Those audience attention levels sustain through the entire pre-show, making cinema the perfect medium to tell a brand story.”
Radio power
Radio is another medium that appears to be holding steady in a period of change for the media industry. Contrary to the famous song, video didn’t kill the radio star, and it doesn’t look like podcasts will either. Radio Broadcasters Association CEO, Alistair Jamison, says that unlike some channels, the impact of new digital audio formats has mostly been incremental or additive.
“We’re not seeing a lot of substitution in audio. Live radio is not the same as podcast. Podcast is not the same as streaming music. Unlike TV and the SVOD/BVOD world, where it’s largely direct substitution, audio continues to create new listening points and access to audio content, and in that way, fragmentation is good for us.”
Listener numbers for commercial radio remained stable throughout 2023, at 74 or 75 percent a week, he says, with the average time spent listening sitting at 15 hours and 32 minutes per week. “Importantly, the audio industry is leading the digital change locally, as opposed having terms dictated by a global platform doing little to support the New Zealand media ecosystem.”
Jamison refers to Australian research conducted and presented by Professor Mark Ritson, who found an 11 percent investment in radio can double your campaign’s impact. “In the presentation of this study, Ritson states that radio is the ultimate sidekick, in that when it’s used on a media schedule, it makes all the other media better.
“Importantly, as part of this study, he also talks to what it can do and speaks to the catalytic impact it can have on a wide range of marketing objectives, including increased retention, driving acquisition, mental availability, brand awareness and brand association. His study proves how powerful radio can be and I think should challenge any advertiser to consider it.”
Putting his “general media industry hat on”, Jamison says that although some of the big media players face challenges in parts of their businesses, it doesn’t mean they’re broken overall. “I think it’s really important that we keep some perspective on what’s happening and recognise the audience that still exists across their channels and platforms, and the relative strength of TV and the role it can continue to play for brands.”
This was first published in our March/April issue.
