Media Week

Figures released last week show the Government is now by far the largest advertiser in the UK.

It spent £211m of its £540m marketing communications budget on advertising in 2008/09, a 35% increase on the previous year, and forged ahead of the other two biggest spenders - Proctor & Gamble and Unilever. Campaigns on obesity, road safety, smoking and climate change were just some of the areas driving this.

But government advertising divides opinion profoundly. Exponents of advertising must surely be in favour, especially at the COI's roster of media agencies: MediaCom, Carat, Starcom, I-Level and Posterscope. After all, advertising works doesn't it? And the Government claims to have saved £241m in media costs against "recognised benchmarks" in 2008/09, a near 50% reduction.

On the other hand, there is built-in suspicion of government intervention in the media sector, epitomised by attitudes to the BBC and its operation in markets that prevents commercial players from competing properly.

The COI's "recognised benchmarks" turn out to be TV station average, Radio Advertising Bureau estimates, and press, cinema and out-of-home rate cards - although any self-respecting media trader would consider those as just starting points for negotiation. Now the COI plans to rationalise its media agency roster to create greater efficiencies.

In its annual report, COI evidence suggests advertising does indeed work. It claims its tax campaign has saved HM Revenue and Customs about £185m, an ROI eight times its ad investment. And the £21.4m spent on ads by the Home Office on vehicle crime reduction has reduced the cost of crime by £590m. The COI says it is supporting the creative industries and expects demand for its services to remain high in 2009/10 - provisional budgets have been set at similar levels to last year.

Last weekend, Tory leader David Cameron told the aforementioned BBC there was a "huge amount of waste and bureaucracy" to be tackled across Whitehall and put government advertising squarely in the frame.

But if the COI's ROI figures are to be believed, and if the Tories believe in the power of advertising, Cameron should think twice about cutting the COI's budget if he gets into power at the next General Election.

Interesting that Media Week has unveiled an influx of senior investors who are joining media trading platform MediaEquals in the same week the debate about newspapers charging for online content reignited.

MediaEquals' appointments Richard Eyre and Andrew Walmsley will be well known to Media Week readers. The former as chair of the IAB, senior adviser to Starcom, Media Week columnist and former chief executive of Capital Radio and ITV.

The latter is co-founder of digital media agency I-Level, which celebrated its 10th birthday last week. They don't usually back losers and are renowned as visionary thinkers.

Meanwhile, speaking at MediaTel's Future of National Newspapers conference last week, NI Commercial's managing director, Paul Hayes, reiterated his company's commitment to introducing paid-for content across its newspaper websites.

Of course, most newspaper groups - and especially NI - already charge for various services or content on their sites. The conundrum in the UK is that charging for news is stymied by the BBC's vast rolling online content resource.

As this week's feature shows, it is still only niche publications such as the Financial Times and The Wall Street Journal that are making a real go of charging for core content online.

The link between ad trading platforms and paid-for content is the decline in ad revenue that has forced online charging up media companies' agendas, as well as the streamlining of ad operations, with trading platforms one option under consideration.

Some believe newspapers and other media companies - such as ITV - should adopt a Google-style ad model, with each slot or spot traded auction-style to the highest bidder in an automated way. This is where providers such as MediaEquals come in. Smaller, leaner media owner sales teams then concentrate on creative solutions and added value.

Media companies are also looking at technologies from the likes of former MySpace executive Jay Stevens' ad network optimisation outfit The Rubicon Project, which could help newspapers especially by facilitating ad revenue from their vast overseas traffic.

Charging online can plug the gap at one end, while greater efficiency and clever technology can work on margins at the other. This is presumably what investors such as Walmsley and Eyre aim to tap into.

Like buses, just as one high-profile magazine launch comes along, it is quickly followed by another.

Last week, Media Week revealed that IPC is launching a cookery title called Dinner Tonight to take on rivals such as BBC Magazines and H Bauer. This week, we unveil details of ShortList Media's much-anticipated foray into the weekly women's magazine market, with Stylist.

Received wisdom has been that free men's weekly ShortList has become popular due to the dearth of quality magazines in the sector, but that it would be difficult to launch a women's product due to the high number of qualities already out there.

However, ShortList Media chief executive Mike Soutar believes he has identified a gap in the market to target the 4.2 million-strong "breakthrough generation" of 20 to 40-year-old women who enjoy 11 years of freedom and career building before starting a family.

The theory is that most quality women's titles are monthlies, such as Glamour, Marie Claire and Vogue - and Grazia is the only existing upscale women's weekly.

Soutar has specialised in men's magazines, but was editorial director at IPC when Look was launched, so isn't a complete novice.

ShortList Media made a pre-tax loss of £2.7m in the 2007-08 financial year, on turnover of £3.1m, but has a three-year business plan and Soutar says the company has been in profit for six months and is on track to break even at the end of August - 12 months ahead of schedule.

The firm's investors include hedge fund GLG Partners, Scottish publisher DC Thomson, former Emap boss Sir David Arculus, film producers Matthew Vaughn and Kris Thykier and French Connection founder Stephen Marks. They have all come in with a second round of investment to support Stylist.

The new launch will expand ShortList Media's brand portfolio, provide economies of scale and raise the barriers of entry into the free sector where it is carving its niche. Agencies have been crying out for new magazine launches to reinvigorate the market.

Soutar recently won two PPA awards and he has magazines in his blood. He has also gathered a high-quality team around him. If he can replicate the success of ShortList in the women's sector, it will provide a much-needed fillip to the magazine market in these straightened times.

Who's going to be the next boss of ITV? The latest candidate to be punted for the chief executive's job is Elisabeth Murdoch.

But, frankly, that would be as likely as media minister and Digital Britain architect Stephen Carter getting the gig, even if he were allowed to take it under ministerial guidelines.

Former BSkyB chief executive Tony Ball was installed favourite early on, when ITV shareholder Legal & General identified him as "their man". But Ball wasn't interested in a competitive interviewing process and would only take the job if he was crowned coronation-style.

Ball has divided shareholders, with some championing him and others put off by his bullish approach. A story appeared in a national newspaper recently about Ball brokering a package that included installing himself as chief exec and an investment bank pumping £500m into the company. It prompted Britain's premier commercial broadcaster to issue a note to the City a few days later. The subtext of this missive appeared to be: "Our finances are in perfectly good shape, thank you, and we aren't going to be forced into a deal."

Other names among many mentioned include former chief executive of Virgin Media's content division, Malcolm Wall, Google's Nikesh Arora, BBC Worldwide chief exec John Smith and former Channel 4 chief exec Michael Jackson.

A similar melange of speculation was played out before the appointment of Rupert Howell as managing director of brand and commercial at ITV a couple of years ago. Chief operations officer John Cresswell and Howell are the internal candidates for the chief exec role and the longer the process goes on the more their stars will rise. ITV veteran Cresswell may be tarred with failures under previous regimes, but Howell - a man not lacking in self-confidence - will feel he still has a shot.

Media Week gathered a panel of experts together for this week's feature to ask them what they would do if they were in charge of ITV. It's a big job and my gut feeling is that the name of the new chief exec hasn't appeared above the parapet yet. It may even be someone who is experienced at restructuring and turning around public companies, but not necessarily an expert in media.