Media Week

Metro, thelondonpaper, London Lite, ShortList and Sport are now ubiquitous presences on UK streets.

And, as Metro celebrates its first decade of existence, it's timely to evaluate the impact free media has had on consumers' habits and, by extension, on media owners and advertisers.

The world of free is inherently interlinked with the rise of the internet, but, in this week's Media Week profile, Associated Newspapers' free division managing director Steve Auckland explains that, while he anticipates free will ultimately migrate to mobile devices, there is still plenty of mileage left in the free print model.

His audience of "affluent urbanites" - average age 36 - consumes Metro on the way to work. In a decade, it has become a respected media brand and is profitable.

A recent seminar organised by thelondonpaper shed some interesting light on the younger, Generation Y audience - or Generation Free as the Wapping-based paper dubs it. These 16 to 30-year-olds are crucial to the future strategies media companies must adopt to ensure longevity for their business models.

Facebook's Trevor Johnson, who is in charge of market development, EMEA, at the social utility, told the seminar this generation had grown up without using a landline phone, didn't watch TV according to a traditional schedule and expects to access content on a handheld device. This audience is used to getting things for free - but doesn't equate free with inferior. They don't pay with money, rather with something they consider even more valuable: time. As well as free papers, Google, Wikipedia, Spotify, Skype, Flickr, iPlayer and Facebook are their modus operandi.

Because of this, I doubt newspapers can ever return the genie to the bottle and charge for their wares online.

There have been murmurings of titles such as The Independent and The Times considering charging for content online. But newspapers made their bed years ago when they decided to go down the high traffic/advertising route, rather than paid-for. The new generation of consumers wants high-quality content and products - and it wants them for free. Media companies must adjust their businesses accordingly and come up with imaginative ways to make the advertising and sponsorship models around their content work harder.

As the economic downturn continues to bite, the recession is shining a bright light on businesses of all types, especially media.

The Advertising Association yesterday released figures showing UK ad spend fell 9.6% year on year in Q4 2008. Across the whole of 2008, newspapers were down 12% year on year, magazines 9.9%, radio 8.5%, TV 4.9%, outdoor 3.8% and cinema 0.9%. Web spend was up 17.3% in 2008 compared to 2007, but this compares to a rise of 39.5% the previous year.

ITV's travails have been well-documented, regional newspaper groups slashed jobs last week, magazine firms such as NatMags and IPC are trimming their workforces and radio is struggling to prove private ownership is better than public (page 12). Media agencies are also reshaping their business models to reflect media's new structure.

Much of this is a normal and sensible reaction to recessionary times. The downturn isn't necessarily the cause of these realignments: rather it focuses minds on what businesses must look like when they come out of the slump. It forces us to deal with long-term structural changes that will make the media world look totally different to that which we have become accustomed.

Are newspapers dead? Will the ad market sustain commercial TV and other media? Can print specialists make money out of digital? What regulation do we need? How do young people consume media and what will they want when they gravitate to become the mass market?

All of these questions and more top our thoughts, all in the context of a severe economic downturn that makes answers more urgent than usual.

We need to get together as an industry to address the important issues that will shape the future. Media Week's annual Media 360 summit takes place in Old Windsor from 13-15 May. I believe it will benefit us all to engage as a community and come up with solutions. Yes, I know this is a commercial venture on Media Week's part. And I know everyone's budgets are tight. But can we afford not to? Let me know your thoughts. Or visit www.media-360.co.uk for booking details.

There have been suggestions in some quarters recently that there is no longer a place for the media agency as we know it and that they have become irrelevant.

Well, up to a point Lord Copper. Agencies are certainly facing their share of business challenges, but isn't it more pertinent to ask whether creative agencies are becoming an irrelevance?

Let's consider the following. Many creative agency staff are already employed on a contract basis, to alleviate the inevitable peaks and troughs in demand from advertisers. But, earlier this year, one top 20 creative agency senior executive was heard to bemoan the fact that his firm had no ads showing on TV, no ads in production and no ads in pre-production - which makes you wonder what is left for everyone to do over there. The tumbleweed blowing through this particular agency's fancy London headquarters must have been a sight to behold.

The fact is creative agencies can no longer justify the high prices they charge for their services to cover, among other things, the running of these offices. Economics demand they readjust their business model to take account of the fundamentally different advertising world we now live in.

Let's take an example: one advertiser was recently quoted £150,000 for a set of idents to wrap around a sponsorship that cost them £250,000. That sort of ratio just doesn't stack up and, let's face it, the quality of creative in most sponsorship idents doesn't justify these figures either. Neither does flying off to some exotic setting to film an ad that could be produced for half the price nearer to home.

The recession has shone a brighter light on the long-term structural problems of media companies - not least ITV and Five - but it is not the underlying cause of them. Look closely at the recent financial results of leading marketing communications groups and you'll see it is media agencies that are driving what small growth is around at the moment.

Don't get me wrong: media agencies - and media owners - face significant challenges as the very structural basis of UK Media plc is called into question. But when spend is tight and return on investment is top of the agenda, media agencies are more relevant than ever.

Last week's feature about media jollies produced a large response from readers and suggested that the exposition of the two sides of the argument for and against continuing with corporate entertainment in a recession had really hit a nerve.

On one side, there are those who believe it is in poor taste to continue with media junkets when all around our sector people are losing their jobs and ad revenues are sliding. Several traditional fixtures in the media jolly calendar have been cancelled in 2009 as a reflection of this view. On the other hand, there are those who believe building relationships with clients and customers is more important than ever in a recession and that to shut off the lifeblood of this process would be cutting off your nose to spite your face.

I am particularly swayed by media agency veteran Steve Booth's take on this. As a founding partner of Booth Lockett Makin, he has spent his own hard-earned cash over many years to fund skiing trips with clients. And now his agency has been acquired by global marketing services giant Havas and rebranded as Arena BLM, it continues to invest in corporate entertaining.

Booth recognises that media is all about people and relationships, and that these relationships are built and reinforced by spending quality time with people away from the immediate work environment. This is probably even more important during a recession if agencies are to retain their clients and come out the other end with their businesses in good shape to take advantage of the upturn (for however bad things seem now, an upturn will come eventually).

I respect those companies that have decided to pull in their horns and cancelled corporate entertainment, put on more cost-effective activities or taken advantage of barter, as ITV is doing. But, if pushed, I would be more swayed by Steve Booth's philosophy.

In any case, it would be hypocritical of a journalist to come over all moralistic about the matter when, if we are honest, my profession is just as partial to the delights of the media jolly as any other.