Life On Mars: A nation travels back in time

Posted by Peter Kirwan on 1 October 2008 at 15:58
Tags: Media

Houses. Cars. Jobs.

The stuff of domestic dreams. Not coincidentally, it’s also the stuff that underpins classified advertising markets. Or used to.

The car industry has come over all Life On Mars and is doing a good impersonation of DCI Gene Hunt. We’re not yet talking about a three-day week. But we’re getting close.

The Telegraph reports that Ford has put Southamption-based workers on a four-day week. Toyota has suspended the night shift at its factory in Derby.

Transport editor David Millward is suggesting that car manufacturers are worried about “being left with huge stockpiles of unsold cars”. August’s figures for new car registrations were the lowest since 1966.

Housing? Last night, I watched the BBC’s 10 O’Clock News. A big graphic flashed up on screen. Remarkably, it suggested that net mortgage lending fell by 98% YOY during August.

I went off to check the figures. They’re astonishing. Here’s what Reuters has to say about them:

Mortgage lending rose by just 143 million pounds last month, a mere two percent of what was advanced in August 2007 and the weakest growth since the series began in April 1993.

If you’re not at the sharp end of this collapse, head over to FT Alphaville — and take a look at a report on the city centre new-build housing market compiled by Alastair Stewart of Dresdner Kleinwort.

Granted, this is the nastiest part of a very nasty property market. These days, grim doesn’t begin to describe what’s happening to this market, which used to be an important source of revenue for city-based regional newspapers. Some extracts:

Our visits to agents and consultants in Birmingham, Manchester, Leeds and Sheffield revealed a near-apocalyptic landscape which we believe to be far worse than even the most candid builders have revealed in presentations.

One stark view was that the six leading property agents in Leeds have sold - between them - only six new apartments in two months. We were also given documentation sent by Barratt to property professionals throughout the group’s Yorkshire East division offering up to 43% off its properties on bulk deals of at least 5 units.

In all four cities agents described: massive over-supply of apartments; developers selling at virtually any price to shift stock of flats; virtually all forthcoming new developments mothballed; according to those we talked to, signs of the biggest listed housebuilders descending into severe financial difficulties; residential sales staff numbers being cut by around two-thirds and a complete freezing up of the land market.

Jobs? Here, we’re probably on the cusp of something very nasty. The Chartered Institute of Purchasing and Supply/Markit report on manufacturing came out today. It shows that during Q2, productivity growth sank to its lowest level since 1990.

Output stalled — but companies held back from making workers redundant. The prognosis from Chris Giles, the FT’s economics editor, isn’t exactly rosy:

Many economists now think the outlook is so bad that companies, which have refrained from cutting staff as they wait to see how the economy fares, will soon start making large redundancies – pushing the economy into a deeper recession than appeared likely only a few weeks ago.

Anyone out there ready for an insy-winsy teeny-weeny uplift in ad yields?

No: thought not.

Yahoo’s APT (Part 2): A few questions for Jerry Yang

Posted by Peter Kirwan on 26 September 2008 at 13:32
Tags: Media

Yahoo’s launch of APT showed signs of haste. These included a press release that appeared to have been written by a chimpanzee on Ritalin.

That’s not really a problem. In fact, it’s a good sign that the big promises made by Jerry Yang yesterday have prompted some chunky questions. These include:

Streamlined workflow:

At yesterday’s launch, Sue Decker of Yahoo criticized the “crummy processes” that lie behind web advertising:

The current ad delivery system is broken. Even for online advertising, it takes 30 steps — including still having to fax invoices and multiple requests for proposals that can take up to six weeks.

In this respect, Editor & Publisher underlines one apparent triumph for Yahoo. Apparently, APT can render “test formats” for advertisers in less than half the time taken by DART (a widely-owned ad serving platform owed by DoubleClick).

Question: How quickly can APT supplant DART in the affections of publishers and sales managers?

Cross-selling

The web rewards both global scale and microscopic niches. Getting stuck somewhere in between these two extremes has been the uncomfortable fate of many traditional news organizations.

This is why APT’s apparent power to aggregate audiences from different publishers makes a lot of sense. Disintermediating ad networks — properly automating them out of existence — could be an attractive prospect for publishers.

In the UK, would this mean ad hoc alliances between rival chains forged online at APT? In the UK’s geographically-fragmented market, this would have its attractions.

Sooner or later, presumably, the Competition Commission will be required to think about this. . .

Behavioural targeting

Yahoo’s supposed prowess in behavioural targeting is cited as a major attraction for the US newspaper groups collaborating on APT.

This makes sense. Yahoo has been running massive display-based sites for years. The company possesses the kind of technological nous of which traditional media organizations can only dream.

But how good is Yahoo’s behavioural stuff? Have Microsoft or Google got better tricks up their sleeves?

Of course, there’s also the spectre of Phorm, and data security more generally. . .

Openness

Lots of blather about this in Yahoo’s marketing material. But few specifics. Yahoo’s Jerry Yang has promised a 2.0-style platform.

If this means anything, it means open application interfaces with which developers can tinker to their hearts’ delight. The result could be a raft of add-on software that increase APT’s value — to clients and agencies in particular.

Yahoo has a decent track record when it comes to openness. Let’s hope it continues in the same vein.

The financial balance of power

In all of the coverage, there was little mention of how Yahoo intends to make money from APT. Here’s how the FT frames the quid pro quo at the platform’s heart:

Hilary Schneider, executive vice president of Yahoo US, said Apt would allow Yahoo to tap into a $9.5bn local online advertising market, using the more than 8,000-strong sales force of its partners in the Newspaper Consortium.

In turn, publishers would be able to sell online inventory from other sites, including Yahoo, to their advertisers under a revenue share agreement.

Yahoo would pool its information on users’ search behaviour with publisher’s knowledge of their location or interests to target advertising more effectively, she said.

The detail is still sketchy, but the aim is clear: collaboration involves Yahoo generating ad revenues from traffic supplied by newspaper sites (and vice-versa).

But who wields the balance of power? How many of the financial benefits generated by APT does Yahoo propose to trouser for itself? How much will revert to the media organizations who bring to the party the volume (and variety) that’s required to operate an online trading exchange?

When it comes to sharing the spoils generated by search ads with media partners, Google has been both secretive and tight-fisted. Will Yahoo be any better? Paradoxically, the company’s commercial weakness suggests that this might be the case.

Is France the capital of Paris?

Yahoo has always been a highly US-centric outfit — even before the recent painful exodus of high-level talent from its European operation.

So it’s a valid question: when will Yahoo deign to expand APT to Europe?

APT will require a lot of selling in Europe. As Google knows to its cost, media agencies are much more powerful here than in the US.

Arguably, too, European newspaper groups are in better health than their US counterparts. They may therefore be less willing to do deals with Yahoo.

Has Yahoo got a timetable for dealing with the Rest Of The World? If it has, it wasn’t saying so yesterday.

Yahoo’s APT (Part 1): A media-friendly future for digital ad trading?

Posted by Peter Kirwan on 26 September 2008 at 12:27
Tags: Independent News & Media, Media, emap

Jerry Yang, the co-founder of Yahoo, calls APT the “next generation of advertising”. Slightly awkwardly, he adds on his blog that APT would be to 2009 “what radio was to 1924, TV to 1947, color TV to 1965, and the Internet to 1993″.

You get the idea.

Actually, APT is intended as a market, an exchange — in the same way that you could describe the London Stock Exchange as a market for share trading. As Yang puts it:

The advertising strategy at Yahoo is about building platforms for publishers and advertisers and our second strategy is about opening things up for multiple sales forces and multiple pieces of inventory.

In other words: APT is what happens when a pure-play giant like Yahoo opens up its highly advanced infrastructure as a trading platform for rival publishers. Yahoo now wants to become a supplier to Big Media, the industry it once threatened to destroy.

Business Week offers a flavour of what’s involved:

The core of the system is an open online marketplace where publishers—Yahoo and its network of partners, including 784 newspapers—use a simple dashboard to post ad slots available on their Web pages.

Advertisers, using anonymous data on visitors to the pages, can target ads to the most likely prospective buyers in particular geographic areas—say, ads for minivans to married women aged 31 to 40 in the Chicago metro area. In one transaction, they can reach potential buyers on Yahoo and on partner sites.

So what’s in it for media owners? At APT’s launch, Yahoo wheeled out Dean Singleton, chief executive of MediaNews Group, which publishes the San Jose Mercury News.

Singleton — whose company has collaborated with Yahoo on the development of APT — believes that the system will dramatically improve newspapers’ ability to generate digital ad revenues.

Singleton believes that media owners will benefit from Yahoo’s behavioural targeting prowess. APT’s ability to combine the offerings of different publishers into a streamlined buying process should also help.

“As part of APT, we can bundle our inventory nationally and in a more targeted way. Today, newspapers are focused on selling sites and sections generally. . .

“We can charge higher rates if we can target better. If we could charge normal rates for our advertising, you wouldn’t be hearing about the woes of the newspaper industry. The reason that online newspaper revenues don’t make up the losses on the print side is because we’re selling cheaper remnant ad space.”

In an interview with the FT, Singleton went even further, suggesting that if APT had been launched earlier, “you wouldn’t be hearing people talk about the woes of the newspaper industry”.

Although he didn’t say it, Singleton probably also hopes that platforms like APT will reduce the role of ad networks, or even disintermediate them entirely. Media owners won’t shed too many tears on this score. Ad networks have always been an imperfect solution to the challenge of selling low-value inventory.

APT should also allow publishers to cut the cost of selling digital ads, perhaps radically. This seems likely because Yahoo’s platform promises to address the supreme paradox of digital advertising — namely: organisational processes that are “crummy” at best. (On Thursday, this adjective was used by Yahoo’s Susan Decker, who knows what she is talking about.)

From Yahoo’s point of view, the ambition is similarly heady. And here’s a significant bit of parsing from Reuters’ Paul Thomasch:

What Yahoo wants is a system as efficient for online display advertising as the one run by Google in search advertising.

Well, yes and no. Yahoo, it seems, envisages APT becoming a unified trading system for all kinds of digital advertising including (yes) online display, but also mobile and search. Video advertising sits on Yahoo’s list of ambitions, too.

So why hasn’t anyone else thought of this before?

As it happens, they have. But in recent years, progress toward automated trading of digital display has been frustratingly slow.

Arguably, the faster-growing market for paid search has been occupying all of the best talent at places like Google, Yahoo and Microsoft. Meanwhile, EBay’s efforts to set up a trading exhange for the US TV industry appear to have foundered in the face of opposition from media owners.

Now, however, Google, Microsoft and AOL are all working on platforms to rival APT.

Of this trio, AOL seems to be closest to realizing something concrete. This week, the Time Warner subsidiary claimed that it will launch an ad exchange called Bid Place in early 2009.

This burst of development couldn’t have come at a better time. In an online display market that shows signs of tanking alongside everything else, it’s precisely what’s required.

By the time we haul ourselves out of recession, digital advertising — and therefore digital media — could look very different indeed.

Digital advertising: The leading-edge indicator of recession (and recovery)

Posted by Peter Kirwan on 22 September 2008 at 15:22
Tags: Media

Enders Analysis is offering forecasts for the UK’s online ad market. For 2008 as a whole, here’s the prediction. (Last year’s growth in brackets).

– Online display (banners/buttons etc): Up 9.8% (30.5%)
– Classified: Up 7.8% (54%)
– Paid search: Up 25.4%

Despite that 9.8% predicted increase, online display is problematic. Ian Maude of Enders tells the FT that “many publishers” in the UK expect their online display revenues to be flat or down during Q3.

This has already happened in the US — during Q2. There, the Newspaper Association of America started reporting newspapers’ digital revenues as a separate category in 2004.

Pretty much every quarter since then, the organization has put out a press release trumpeting its members’ online revenue growth. In 2004, digital revenues grew by 27%. In both 2005 and 2006, growth was 32%. In 2007, it was 19%.

But in Q208, there was no press release. That’s because digital revenues at US newspapers went into reverse between March and June, declining by 2.4% YOY.

This par in this morning’s FT piece reporting Enders’ forecast was interesting:

An expected trend towards brand-building online is not as strong as expected, making up only 5 per cent of online spending. “This is a reality check for online advertising,” [Ian] Maude [of Enders Analysis] said.

Expected trend? Mmm. More like a fervent wish triggered by the rampant success of paid search as a direct response medium. . .

Meanwhile, at the IAB, Guy Phillipson is predicting casualties in the middle of display markets:

“Advertisers can enjoy lower rates over networks but mainly for direct response. Premium products can easily attract spend. But there will be quite a few sites suffering in the middle that don’t get one or the other.”

Six months ago, the general hope was that a quick downturn would involve cash being shaken out of print and placed online. The prospect of a recession in digital advertising seemed distant enough.

Now that digital display is heading downward, these numbers are going to become the leading edge indicator of recession. Digital will come back further and faster than anything else. And only when they turn upwards can we start thinking about a broader recovery.

UPDATE — 26/9/2008: The forecast from Enders is complemented by two other sources. The first is TNS, which suggests that spending on digital display ads in the US grew by just 8% in 1H08. This is not dissimilar to the NAA’s number for Q108.

Elsewhere, PricewaterhouseCoopers is predicting 10%-15% growth in digital display for the UK during 2008 as a whole. At the higher end, that’s more optimistic than Enders. At the low end, it’s identical to Enders’ forecast of 9.8% growth.

My guess is that that PWC will be forced to revise its forecast down into single figures before the year is out.

Making sense of the crash: Spivs, pigs and the cost of the Iraq war

Posted by Peter Kirwan on 18 September 2008 at 13:28
Tags: Media

More spivs (Metro). And a pig (Daily Mirror). Both are here.

Amid much ribaldry about tabloid innumeracy at FT Alphaville, is the Mail’s Philip Delves Broughton talking out of his ass when he claims that the cost to the US taxpayer of “supporting failing financial institutions is fast approaching that of the Iraq war”?

The war in Iraq has been going on for nearly six years. Delves Broughton says it has cost around $600bn so far (although some estimates are far higher than that). The US government bail out has cost $300bn, he reckons.

In today’s FT, Kenneth Rogoff, professor of economics at Harvard University and former chief economist of the International Monetary Fund, quotes a similar cost for bailing out Wall Street — $200bn-$300bn.

Rogoff suggests that this is “roughly equivalent to the cost of another year in Iraq”.

Same numbers, different parallels. FWIW, I suspect Rogoff is using something like the real cost of the Iraq war for his calculations (as opposed to the Bush administration’s minimalist estimates).

This kind of stuff is only going to get worse in the coming weeks and months. And nota bene: we haven’t even started arguing the toss about the cost of the British bail out.

For good measure, Rogoff reckons that Washington will end up spending $1,000bn-$2,000bn on rescuing Wall Street.

At the upper end of the scale, we make that approximately 3.33 Iraq wars.

What a missed opportunity for the military-industrial complex.

Newsquest’s 30% classified decline is worse than Gannett

Posted by Peter Kirwan on 18 September 2008 at 10:59
Tags: Gannett, Media, Newsquest

Fun with statistics. It would appear that Newsquest’s classified revenues in the UK fell more rapidly than those of its parent company Gannett during August. (I assume the overall numbers for Gannett include the UK).

Only in employment ads is the picture worse in the US. In property and automotive markets, the UK declines are steeper.

Gannett classified (all) — August: down 28%

– Real estate: Down 40.9%
– Employment: Down 33.6%
– Automotive: Down 21.1%

Newsquest UK classified — August: Down 30.4%

– Real estate: Down 53.6%
– Employment: Down 27.2%
– Automotive: Down 25.9%

This might mean something, it might mean not so much.

August is a thin month, and the YOY comparisons for the UK will have been tougher than for Gannett as a whole. (That’s because the downturn in the US started earlier than here, where we’re still making YOY comparisons with pre-downturn numbers).

All the same, if this pattern continues, it’ll be time to start wondering what the future holds for Newsquest.

The crash is a potential nightmare for Cameron and Tory-leaning editors

Posted by Peter Kirwan on 17 September 2008 at 22:59
Tags: Media

So the politics has started. Yesterday, the Mirror’s “Gorilla Of Greed” headline. Today, Simon Jenkins wants to know which members of the boss class should be taken out and shot.

At the FT, the mild-mannered John Gapper writes: “The word ‘irresponsible’ does not begin to describe AIG’s behaviour. . . Regulation cannot solve everything but enough is enough.”

Following loose anti-City talk at the Express and the Mail, David Cameron has been forced out of his corner.

Today, Cameron told the FT: “We must not let the left use this as an excuse to wreck an important part of the British and world economy.”

No mention of spivs. And no suggestion of increased regulation. Spinning his lines in this context won’t be easy for Cameron.

It’s going to be just as tricky for the Tory-inclined editors who hope to support him at the next election.

Sir Ray Tindle’s oasis of calm: “Bouncing back to great prosperity”

Posted by Peter Kirwan on 17 September 2008 at 22:48
Tags: Media

Overlooked amid the madness: Sir Ray Tindle’s family business has bought three weekly newspapers in Essex. The man himself — 82 next month — had bullish words for the FT:

“Of course, I can only speak for my own local weeklies, but I firmly, totally believe the local press will not only survive the present situation, but will bounce back to great prosperity.”

Interesting to note the FT’s suggestion that Tindle Newspapers only experienced a 7% YOY decline in revenues during the third week of August.

If that’s Tindle’s actual run-rate for the entire summer, I wouldn’t quite eat my hat. But I’d consider it.

Spivwatch: They infiltrated the Express long ago

Posted by Peter Kirwan on 17 September 2008 at 22:27
Tags: Media

Hilarious footnotes on today’s Express front page, which suggested that Britain needs saving from the spivs of the Square Mile.

The source is MailWatch, which organizes its content into the following excellent categories: “Ban This NOW”; “Cancer”, “Diana”, and “Johnny Foreigner” (among others).

They’ve really excelled themselves in the hypocrisy stakes this time. Express journalists are all spivs. They contributed to this collapse with their constant ramping of property and their attempts to pump up the house price bubble even more.

And this:

Would this be the same spivs who manipulated the system through the mortgage market, artificially increasing the value of houses, which used to be A Very Good Thing in Expressland?

Now that our collective financial clock has been wound back to the 1940s, the re-emergence of “spiv” as a term of abuse feels appropriate. Alex Salmond used the expression this afternoon in an attack on the investors who drove down HBOS’s share price this week.

No-one knows where the word originates. One suggestion is that it was coined by spelling “VIPs” backwards. Another is that it’s an acronym used correctly. Apparently, the police once pursued Suspected Persons and Itinerant Vagrants on the streets of this pleasant land.

“Spiv” was also the Romany expression for sparrow. As the Cassell Dictionary Of Slang notes, the word was was used to describe anyone who made a living “by picking up the leavings of their betters, criminal or legitimate”.

All three sound perfectly fitting under the current circumstances.

Meltdown reporting: A few good ‘uns

Posted by Peter Kirwan on 16 September 2008 at 16:57
Tags: Media

The carnage on the financial markets has produced some great reporting.

On Monday, the Guardian’s coverage was excellent in parts. Nils Pratley and Jill Treanor rattled off a sold blog-like resume of Monday’s events here.

Pratley went for the mysteries of Lehman Brothers’ balance sheet fearlessly. In the middle of another long piece, he put his finger on one of the reasons for the bank’s demise in terms everyone could understand:

Now take a look at Lehman Brothers’ balance sheet. On page 62 of last year’s accounts, under the heading “off balance sheet arrangements” you will find a staggering figure. Lehman had derivative contracts with a face value of $738bn. The notes, fairly, make the point that the fair value is smaller than the notional amount - Lehman believed the figure was $36.8bn. Even so, “mind-boggling complexity” perfectly describes Lehman’s accounts. How can you hope to sell such a business over a weekend?

At the Times, Suzy Jagger supplied great colour from New York. And associate editor Anatole Kaletsky started to change his mind about the magnitude of the crisis.

In print, Kaletsky now sounds almost as spooked as Ambrose Evans-Pritchard at the Telegraph. By the time he reached Newsnight’s studio last night, the donnish economics guru from Wapping sounded positively bleak.

Talking of Newsnight, it’s fairly clear that business stories aren’t Jeremy Paxman’s strong point. Now and then during the discussion with Kaletsky & Co., The Great Inquisitor sounded somewhat naive. But perhaps this is a minor point at a time when most experts can’t predict what the next 48 hours might hold.

At the Telegraph, Jeff Randall was to be found spitting blood at the Masters of the Universe. (”Nobody said that capitalism was devised to provide soft landings for hopeless losers.”) There was also some fine comedy:

What little faith I had in financial wizardry was blown away 10 years ago when Long Term Capital Management, a hedge fund set up by a couple of economists with Nobel Prizes in the cupboard, went pop. Lehman, I’m afraid, went the same way: bamboozling itself.

Over lunch at its Canary Wharf offices, you could feel the heat from all those first-class brains, working out how to make billions from financial products that only an expert in nuclear fusion could comprehend. I didn’t have a clue what they were talking about. The trouble is, it turns out, neither did they.

The Telegraph’s political correspondent James Kirkup also found time to write up “Gordon Brown’s curse“.

Brown apparently opened Lehman’s swish offices in London in 2004. He’s also got a habit of turning up to football and rugby internationals — only to see Scotland or England lose. Oh, and he also sent Andy Murray a good luck letter before the final of the US Open. The Scot went on to lose in straight sets.

It figures.