Saturday, April 24, 2010

NZ media - Innovate or die

Ok, so it's not the most original headline and somewhat dramatic. But local media owner innovation is an issue for me that I'm feeling very strongly about.

As a media agency, we are engaged by our clients for a number of reasons but one of the key ones is cost efficient and effective media purchase across channels. It's the requirement - and in some cases these are tied to our income - for cost efficiency that drives the agency to negotiate hard on behalf of clients.

Invariably most campaigns do include an online display element, however we're now seeing more and more of the NZ based online media owners dropping CPM rates to match those offered by ad networks and international sites with much higer levels of inventory. Of course this is great for us and great for our clients - but how sustainable is this for the local online media market? With sub $5 CPM rates being touted about, even I can do a back of the envelope calculation to work out that the revenue is minimal.

Of course a site like Trade Me is an exception, and interestingly the smaller niche sites are innovating well - for example, and This enables them to hold CPM's at a higher rate but the effectiveness (however it's defined) generally justifies these.

If this continues the NZ based media properties who don't innovate with their product and/or advertising propostion are destined for failure. Ad spends are moving faster than ever from local market offerings, because there's very little differentiation in the inventory between local and international players. In fact the international offering is stronger, with behavioural targeting well established and advanced targeting opportunities offered all the time.

So NZ sites - we want to invest with you. You have relevant local content and information which engages our audiences. But you need to start differentiating on something other than price parity. And whilst this may feel like a chicken and egg situation - you need to invest to get additional revenue - trust me when I say that our budgets are following the results and are going to those who can deliver. Being NZ based no longer guarantees you income.


  1. Interesting isn't it. One could be forgiven for thinking this is another example of the thin end of the wedge, for NZ website publishers.It's disengenous to suggest that website publishers are reluctant to invest. Content is king and ensure that, publishers have to invest, in online editors, site development, statistics etc. What is the value of online display advertising? Who decides what the value is? Is the value simply what advertisers are prepared to pay? Publishers provide the site, the content,the page impressions and unique browsers and the environment. The continual erosion of the CPM value around online display advertising is a road to nowhere. I've seen this process over the last 15 years in all the electronic media, radio, tv etc. The inevitable result is that no one actually makes any money.Sure, the client is happy; they get to reach the audience but only have to pay the bare minimum and certainly nothing like fair value. The agencies claim credit for negotiating a so called "deal". In the end, publishers and their representatives will make so little that online display advertising will become an unprofitable activity,content provision and by definition, browsers, page impressions and audiences.

  2. Hi Gary
    I agree with you - CPM erosion is a race to zero in an already commoditised market. And it's being driven by much larger markets than ours with excess inventory and larger agency scale. The commoditisation affects not only the local publishers but the local agencies. The trick (I think) is to build value into core local content and apply the low value CPM inventory as bonus/make better. Of course you need a buyer to subscribe to purhcasing the content and that's where agencies need to see the value beyond CPM. Are you coming to the event on Thursday? A