Media Week

The Media Week Awards night, which took place at a glitzy ceremony at the Grosvenor House Hotel in Mayfair last Thursday, sometimes begs as many questions as answers.

Will the comedian make himself heard above the raucous crowd? Answer: Frankie Boyle kept the room under control for 15 minutes - no mean feat as several entertainers from previous ceremonies and your humble correspondent can testify.

Where are TalkSport's awards trophies? Answer: a search party has been dispatched after the radio firm celebrated so hard it "misplaced" its Media Brand of the Year, Sales Pitch Niche silver and Sales Pitch Large bronze trophies somewhere in central London.

And what were Manchester City footballers Shaun Wright-Phillips and Wayne Bridge doing at the OK!-sponsored awards after-party less than 72 hours before a match? Answer: who knows, but they were less than impressive in City's 0-0 draw with Birmingham on Sunday.

Some questions answered themselves. Few disagreed with the judges' view it was Mediaedge:cia's turn to be crowned Media Agency of the Year. Chief executive Tom George and his team have transformed WPP's former weakling into a media powerhouse, winning the prestigious Orange account among £130m of new business in the awards period. MEC has kicked off this year in similar style, winning Lloyds and retaining Danone, and will mount a robust defence of its title.

Sales Team of the Year was much closer and it is a tribute to Nick Bampton and Viacom Brand Solutions that it won top sales gong for the second year. Judges were impressed with VBS's entrepreneurial and proactive approach to setbacks, such as the ban on HFSS advertising, which particularly hit Nickelodeon and MTV. This was reflected in its work for Ella's Kitchen, which won Sales Pitch Medium.

TalkSport has turned itself around since some dark days a few years ago and thoroughly deserved its Media Brand of the Year success. WPP's MediaCom also had another good year, winning Grand Prix and Media Idea Large for Mars Galaxy, Media Idea Niche for NatWest "Teens Adapt" and International Campaign for Herbal Essences.

It was a great year, with the winners rising above the recessionary gloom to set the bar extremely high for next October's renewal, which we are already looking forward to.

I saw a very silly film at the cinema last night: the Vince Vaughn vehicle Couples Retreat, based on the premise of four American couples who head off on a "dream" holiday that turns out to be not quite what it seems on the surface.

Silly it may have been, but it was also very entertaining - perfect mindless fare for a midweek evening when a bit of relaxation was called for.

The reason it caught my eye with my Media Week hat on was the blatant product placement within the storyline and as incidental furniture. A Guitar Hero video game segment and a strategically positioned pack of Budweiser beer particularly caught my eye. In fact, it made me and some of my fellow cinemagoers chuckle at the sheer chutzpah of the film-makers in being so blatant about it.

Did I notice it? Definitely. Did I remember the brands? Absolutely. Did it spoil my enjoyment of the film? No.

I can't imagine product placement working in a Bergman-esque movie about the struggle between life, death and love, or a Mike Leigh social realism docu-drama. But, in its place, it is perfectly acceptable and legitimate - as long as it doesn't make a mockery of or overshadow the plot.

For example, I can't see a problem with beer brands appearing in the Rover's Return on Coronation Street. If anything it would make the action more realistic. But it has to be done sensitively and subtly, especially on TV, which is a more intimate environment than a big screen at the cinema.

Battle lines have been drawn for the biggest ever UK media pitch, for the consolidated COI account, and the three shortlisted bids will spend the next two months preparing for a unique clash.

While the account will struggle to hit the £250m the Government communications agency spent in 2008/09, it is still a massive deal, to be fought out by Starcom MediaVest Group and I-Level, pitching as Smile (see what they did there?), a GroupM collaboration called M4C and Aegis Media's Carat, pitching with out-of-home sibling Posterscope.

Omnicom, which handles some COI comms planning through Manning Gottlieb OMD but no media buying, declined to pitch, preferring to concentrate on global accounts. Havas also took a rain check, perhaps deciding it couldn't match the volume buying discounts of its rivals.

Radio Advertising Bureau founder Douglas McArthur, newly appointed chairman of UKOM, helped shape COI agency strategy, convincing it to consolidate buying with one supplier, which seems logical in a converging media landscape.

MediaCom currently handles COI's press, while Carat buys TV and cinema and Posterscope outdoor. Starcom looks after radio and I-Level is digital incumbent.

I-Level spoke to everyone before hooking up with Starcom, which is a double-edged sword for the Publicis agency. It will help Smile leverage I-Level's excellent relationship with the COI, which represents 40% of I-Level's turnover and keeps over 40 people busy. But teaming up with a third party sends out mixed messages about Starcom's in-house resource and fudges the COI's criteria of consolidating buying in one agency.

WPP's M4C brings the other GroupM principals, Mindshare and Mediaedge:cia, into the equation, giving COI the option of choosing which agency it works with in particular areas while retaining group buying muscle.

Carat is TV incumbent and has the digital clout of new chief executive Robert Horler, which may be why it didn't bid as an Aegis consortium that would have brought its Isobar digital arm into the mix.

The prize is enormous for whoever comes out on top and the implications of the COI's decision will undoubtedly send shockwaves throughout media in 2010.

"Who drinks where?" might seem a slightly frivolous subject for an article in a business magazine, but it provides a welcome counterpoint to recent features in Media Week on such heavyweight topics as agency remuneration, procurement, out-of-home advertising business models and the recession.

It's good to vary the media diet and, after all - and especially in a recession - it's well worth remembering that media is very much a people business. Pubs such as The Dudley Arms in Paddington became synonymous with Zenith in the first decade of its existence and The Duke of York and Newman Arms are staking similar claims for the Publicis agency's modern-day planners and buyers, as is the Devonshire Arms for OMD, The Carpenters Arms for Starcom MediaVest - and, latterly, Vizeum - and The Hope for PHD. Other areas of London and media nodes throughout the country boast their own vibrant media scenes.

Media is a sociable business and is so much the better for it - we should not allow the recession to puncture the essence and lifeblood of our industry. It is within the media pubs that the fabric of agencies is renewed and philosophies are defined. It's where account wins are celebrated and unsuccessful pitches mourned. It's where contacts are made and gossip is shared - although be careful not to reveal any state secrets if you stray into a rival agency's territory and have one too many to drink.

If you venture into Fitzrovia, or NoHo if you prefer, on a Thursday night, you will still find the various pubs and bars packed full of media types of all levels of seniority chewing the cud, making contacts, discussing issues, doing business and just plain having fun - and long may that continue.

* On the subject of people and celebrations: next Thursday (29 October) is the big night in the media calendar, as the industry gathers for the Media Week Awards at London's Grosvenor House Hotel in Mayfair. If you haven't booked your ticket yet, do hurry, as there are only a few left. Contact Kate Collins on 020 8267 8188 or kate.collins@haymarket.com
for details.

Yesterday's Bellwether Report, which analyses confidence in marketing budgets for the third quarter of 2009, provided glimmers of hope for a media industry that has endured a battering over the past 12 months.

The IPA's regular quarterly questionnaire of 300 UK-based firms about their planned marketing activities suggests budgets are still falling - for the eighth quarter running - but at the smallest rate since Q2 last year. There has been a surge of confidence in financial prospects ahead and hopes of an economy returning to growth on the horizon.

Of course, everybody is couching this small improvement in modest terms and they certainly aren't crowing from the rooftops about it. This recession has been a sobering experience for many people who haven't worked through such a downturn before.

Even media veterans who are onto their third recession, such as MPG chief executive Marc Mendoza, tell Media Week in this issue's main feature that we may not have seen anything like this before. But it is testament to the resoluteness and robustness of the media business that there hasn't been a plethora of high-profile bankruptcies.

Media companies have acted early and prudently, making tough decisions and trimming costs where necessary. It will hopefully equip agencies, clients and media owners with the tools they need to come out of the recession leaner and healthier, although in a fundamentally reshaped business environment. There is more than £1bn of media business up for pitch at the moment, which means agencies have to work harder than ever just to keep what they've got, let alone think about planning for growth. They are reshaping their businesses to put fee-based income at the heart of their models, rather than commission.

It has been a fraught time for media owners as well, with sales teams staying close to their clients, being extra creative and cutting imaginative deals to eke out every possible penny from advertisers.

The lessons from this recession are worth bearing in mind as better times return. The importance of risk management and contingency planning are likely to remain on the agenda permanently for senior management teams - and that cannot be a bad thing as the industry starts to emerge from its shell.

If you re-read Media Week's interview with London Evening Standard proprietor Alexander Lebedev from a few months ago, there were some strong hints that the Russian oligarch was seriously considering taking the Standard fully free.

He referenced a "world trend with the internet and free news­papers to make money from advertising rather than direct sales" and the inconvenience of "getting 50 pence out of your pocket". These portents were confirmed last Friday, when it was announced that the Standard will be fully free from next Monday (12 October).

The Standard has done well with its selective free distribution around theatre-land and central London Tube stations after 7.30pm. People take and read the papers and tend to keep them when they get off their Tube, train or bus.

Lebedev also noted that, for him, running a newspaper isn't a business in the sense that it is for competitors such as News International and Associated Newspapers. He is a very rich man and sees owning a newspaper as an influencing tool, rather than a profit-maker.

That is just as well. Eschewing around £75,000 a day in cover revenue and the extra cost of distributing 600,000 copies rather than 250,000 will require newly installed ad director Jon O'Donnell to work harder than ever to attract advertisers.

And a free Standard is likely to precede numerous related developments in the newspaper market if rumours are to be believed. The future of the London Lite is still unclear, with some saying Associated is simply waiting a decent interval from thelondonpaper closing to follow suit, or that it is on the verge of selling it to Lebedev, who will in turn shut it down. Others say Associated and News International are set to embark on a joint venture on Associated's morning freesheet Metro, to avoid cutting each other's throats over the Transport for London free newspaper Tube contract. And some still think The Independent will eventually end up under Lebedev's wing.

Paper costs are up 22% year on year. Ad revenue is suffering the harshest recession in living memory. It is no surprise newspaper companies are considering all their options to keep their business models tenable.

AOL's $350bn merger with Time Warner in 2000 was a defining moment of the dotcom boom. The image of Steve Case, chief executive of America Online, embracing the chairman and chief executive of Time Warner, Gerald Levin, hit the news headlines of every TV bulletin in the Western world.

Roll forward almost a decade and things have changed exponentially, and not as predicted. The promised new distribution channels, cross-promotional initiatives and joint content deals never materialised and the two entities found it much more difficult to work together than anticipated, culminating in May's decision to separate AOL as an independent company concentrating on online services, while Time Warner focuses on cable and media.

AOL has had a turbulent 18 months and the man entrusted with knocking the one-time dotcom darling back into shape is Google's former head of US ad sales, Tim Armstrong, who joined AOL in March and has given his first UK interview to Media Week.

After Armstrong's three-month review, the Platform-A initiative, which brought ad sales, ad networks and ad technologies under one umbrella, has been canned and now goes under the AOL Advertising moniker.

Chief executive Randy Falco and European chief executive Dana Dunne have left, and head of overseas operations Brendan Condon has gone back to the US. The Bebo social network, acquired for $850m last year, has 12 months to prove itself or it will probably be offloaded. And Armstrong is renewing AOL's focus on content, vowing to double its UK properties to 200 within 18 months.

The company desperately needs a coherent identity and management unit. It needs a clear strategy and heightened focus on customer service to make it easy to do business with and give agencies a viable alternative to Microsoft, Yahoo and Google. Armstrong is clearly a smart operator and single-minded in his approach, but he has a tough challenge on his hands to restore AOL's mojo in such a fast-moving, dynamic and demanding media space.

Running a TV company is not an easy job. That's why ITV is finding it difficult to replace Michael Grade and why it's hard to assess the performance of departing Channel 4 chief executive Andy Duncan.

Duncan had some successes in his five-and-a-half years at the helm. With 4oD, C4 was the first major broadcaster to launch a fully fledged video-on-demand service. In 2005, it was the first UK operator to simultaneously broadcast on TV and PC.

He also launched digital channels More4 and 4Music, extended E4 onto Freeview and turned Film4 from a niche pay-TV channel into a free-to-air proposition that makes much more money than it did previously. C4 says audience share has gone from 10% in 2004 to 12% in 2009 and that ad share under Duncan's tenure is up from 10% to 25%.

On the downside, last year's 4Digital radio fiasco won't figure in the list of Duncan's achievements, nor will his response to the Shilpa Shetty/Celebrity Big Brother racism row in 2007. Unfortunately, the overriding feeling is that when it came to the "big stuff", Duncan failed to push the ball over the line.

There is still significant doubt about C4's long-term future. Duncan bet the house on securing alternative funding - although C4 denies he ever asked for a share of the TV licence fee - but ultimately failed. His prolonged public pronouncements about C4's £150m funding gap that had to be filled from external sources positioned the broadcaster as a weakling not in charge of its own destiny.

This year, Duncan failed to secure a partnership deal with BBC Worldwide - the last chance for him to land the big one and leave a positive legacy.

As stated, none of these are easy challenges. But that's why senior TV executives get paid bumper salaries: to address complex and difficult problems and find solutions that benefit their organisations.

One of Duncan's first acts when he joined C4 in 2004 was to scupper a merger with rival broadcaster Five. It would be ironic if one of the by-products of his leaving was the reopening of that possibility in 2010.

Five is a most unusual TV company. In the UK, it is the runt of the free-to-air broadcasting litter, struggling manfully to compete with its bigger and more glamorous rivals ITV and Channel 4.

However, Five's parent company - RTL Group - is the biggest broadcaster in Europe, so the UK minnow has a very powerful parent that enables it to stay in the game and, if it gets its offer right, punch above its weight.

But Five's fortunes have not been good in recent times. Media agencies have targeted it mercilessly this year and the broadcaster's revenue is set to fall a shocking 25% in 2009, 9% more than the overall TV market. Feisty chief executive Dawn Airey, profiled on page 12 of this issue, puts this down to Five losing its mojo and, basically, being too expensive.

She has used the 11 months since she rejoined Five to rectify pricing, strengthen her executive team and put the fun back into the operation - the latest fruits of which were revealed in last week's promising autumn schedule launch. Five is also about to win the Discovery third-party sales account from Sky.

Running parallel, Five has been talking to all and sundry about "all options of consolidation". Talks with C4 reached a particularly advanced stage, but foundered principally because C4 simply didn't want the merger to happen. But they could yet resume once C4 has a new chief executive and chairman in place.

RTL's chief executive Gerhard Zeiler recently told the Edinburgh TV Festival that costs in the TV industry had inflated massively and that everyone had to look at running costs, production and distribution. Five is offering itself as a deal partner through which such synergies and savings could be achieved.

If Five has had its "turn" this year, the feeling is that TV traders may target Sky in 2010 and a Big Brother-less C4 in 2011. With a fair wind and if new programming developments live up to expectations, Five could finally be in a position to ink a deal that will deliver some value back to its supportive shareholder.

Last week, Sony announced it is to roll out 3D technology to its TVs, laptops, DVD players and PlayStations by the end of next year. And Sky is also launching the UK's first 3D TV channel in 2010, following the achievement of a tipping point in take-up of its HD TV offerings.

This week's feature analyses whether 3D TV is about to become the next big thing in television and what we can learn from the HD experience from an advertising and broadcasting point of view.

Sky News is soon to become the broadcaster's 34th HD channel and there are now 1.31 million Sky+ set-top boxes capable of serving HD in homes throughout the UK, although there are actually nine million HD-ready TVs. Virgin also has an HD service through its V+ HD box and so does the BBC and ITV via Freesat.

Current 3D technology requires viewers to don special glasses, which I can't help feeling will hold back universal appeal of 3D viewing after the novelty has worn off. But lenticular screens that don't involve glasses-wearing are being developed and could make the new format fly.

Sadly, when Sky put its HD offering together it "forgot" about advertising and any HD ads so far have had to be attached to the broadcast content stream, because the stream that sends ad content isn't HD-enabled. So an ad campaign such as the Ford Mondeo activity that won one of Thinkbox/Media Week's TV Planning Awards last year was a hybrid affair by necessity.

It will take an investment of a few hundred thousand pounds to make the ad stream HD-compliant and I understand moves are afoot at Osterley to make this happen. In terms of 3D, there will be no oversights this time and 3D ad serving is very much built in to Sky's 2010 launch from the start.

Eighteen months ago, everyone was sceptical about whether HD would take off - but it is now becoming ubiquitous. If lenticular sets remove the need for silly glasses, I can see exciting 3D possibilities ahead for broadcasters, advertisers and viewers starting at the end of next year.

The outdoor advertising sector is unique. Unlike other media, it is not surrounded by content to hook the consumer in. The "medium" is the environment where the poster sits, such as the side of a busy road, a Tube station or railway platform.

I was on a panel debating the future of media on Press TV's Forum show last week, filmed before an audience of 70 young people from London.

It was becoming increasingly incongruous for News International to talk about charging for all of its online content across all of its newspapers when one of those titles was thelondonpaper.

After all, the company could hardly start asking web users to pay for online access to a free newspaper's website.

While this was one of the straws that broke the camel's back, it was unlikely to have been the sole reason for NI to finally concede defeat and pull the plug on the loss-making free paper. In today's economic climate, harsh lights are being shone on everyone's business - and a pure ad-funded model just wasn't sustainable.

The closure initially begs more questions than it answers. What will London Lite do? It was set up as a spoiler to scupper thelondonpaper's development. So, presumably, its work is now done and it will close and Associated Newspapers can go back to concentrating on its profitable Metro free daily morning paper?

And what will the impact be on the London Evening Standard? Presumably it will be an opportunity for an already more youthful and semi-revitalised paper to sell more copies to the younger audience that embraced thelondonpaper's approach? Will the Standard continue to give away free copies after 7.30pm in the centre of London, which has worked well in recent months?

Then there's tfl's free newspaper distribution contract, which is currently out to tender. Metro is the incumbent, but it is likely to have far fewer competitors now.

Finally, could this be good news for good old fashioned daily newspapers, and will the tide turn back towards paying for them?

We've heard a lot about Generation Free in recent times, as thelondonpaper dubbed its new breed of consumers used to getting free content from a variety of sources - especially online. That generation hasn't gone away or changed its habits just because thelondonpaper has called time on its free experiment.

But perhaps it's time for the media industry to act as one and try and stimulate a "Generation Pay" that recognises the value in professionally produced, quality content and is prepared to shell out their hard-earned for it. Or am I just living in cloud-cuckoo-land...?

There has been a lot of debate recently about the word "digital" and whether it still has any stand-alone relevance or validity.

In May, Decipher's Nigel Walley told Media Week's Media 360 conference the word had become redundant in a media context. He believes it has become a catch-all term for too many things or is used just to mean the web and a bit of mobile, ignoring big-ticket environments such as TV, radio and outdoor.

It's certainly true that everyone is bored with the oft-chanted mantra that this agency or that media owner is "putting digital at the heart of their business".

But if digital is redundant, where does that leave "digital" agencies? In this issue, Media Week profiles Andrew Walmsley, co-founder of UK's best-known and most well-established independent digital media agency - I-Level - as it celebrates its 10th birthday.

Over the decade, I-Level has fiercely guarded its independence, despite conversations and approaches from established agency networks. Walmsley's view has been that I-Level would be used as a sticking plaster for a network catching up on "digital", and would lose its very essence by merging with a full-service organisation.

I-Level has done some excellent and award-winning work for the Government, but the COI's decision to consolidate its media into one agency has sharpened the focus of Walmsley's planning for the next decade. The COI accounts for £39m of I-Level's £100m turnover and it can only re-pitch for the business in an alliance with another agency providing "traditional" media services.

Is this the right time for I-Level to bite the bullet and do a deal with one of the agency networks pitching for the COI business? Or is it an opportunity to create something genuinely new - similar to what I-Level did on launch 10 years ago - with an agency model for a permission-based advertising age where the consumer is king?

The strategy Walmsley and new chief executive Stephen Rust adopt will say a lot about the future of "digital" within the marketing services mix.

How do you solve a problem like ITV? That perennial question was back in the spotlight last week as Britain's premier commercial broadcaster released its half-year results for the six months to the end of June.

ITV also announced it had ended its extremely ill-fated flirtation with social media, selling off Friends Reunited for a whacking £150m loss to Beano owner DC Thomson.

Contrary to misinformed reports in some places, a new ITV chief executive was not named. The jury is still out on who is going to put the long-term strategy in place to revive fortunes. Actually, that is a little unfair, because there were some reasons to be cheerful in the small print underneath ITV's headline pre-tax £105m loss.

Ad revenue was only down 15% year on year against a market average of 17%. ITV expects its ad revenue to be down 12% in Q3, and just 7% in September, again outperforming the market. Not yet reason to hurl the top hat into the air, but encouraging nonetheless.

Sponsorship revenue increased 11% to £30m, a total likely to hit £50m across the full year. Digital revenue from ITV.com doubled to £10m. Again, small beer in the scheme of things, but at least they are improvements.

Significant costs have been taken out of the business and these savings are starting to feed through to the bottom line. The pension issue is not great - an understatement - but it is being addressed.

Aside from the financial results, ITV still expects an easing of the contract rights renewal mechanism to be announced before the next trading season.

In addition, ITV is looking forward to a relaxation of the rules banning product placement under a Tory government, which it believes could bring in an extra £50m of new money a year.

So the ship has been stabilised and there are clearer waters ahead. But if it is to sail forward confidently into a convergent multichannel digital future, the new chief executive will have to implement a new vision swiftly and decisively.

Managing decline and outperforming a plummeting market by a couple of percentage points is not a recipe for long-term sustainability.