Best of the Week: No dummies

[View web version]( BEST OF THE WEEK And another thing... Welcome to Best of the Week. Today’s involuntary soundtrack is Eminem, drifting in through my study window from the builders renovating the house next door. They’ve had to crank up the music so they can hear it above their angle grinders and concrete mixer. Still, I like Eminem, so the joke’s on them… This week: Outside the bubble, boring Enero, Domain’s robots, and BuzzFeed’s exits. One of the problems with writing about the media and marketing industry over a couple of decades, is that it gets harder to maintain the rage. And easier to focus it on the noisy builders next door instead. Last weekend, I had more emails than usual from people who enjoyed reading my Best of the Week on the implications of the Royal Commission. One or two were even kind enough to compliment the level of research that had gone into it. Yet, because the whole issue of the bank’s mass bad behaviour had infuriated me since it began to emerge, it was a relatively easy piece to write. It took me half the time some other editions of Best of the Week do, and I enjoyed doing it. The reason was that I felt strongly about the issue, so it came out easily. But one of the side effects of being in this industry a long time is that you gradually come to realise that at the top levels of companies we are not actually surrounded by idiots, wilfully doing the wrong thing. While you do meet the occasional charlatan, most of the executives you meet are good at what they do, doing the best possible job, even when things don’t work out. The more time you spend with them, the harder it is to be harsh about them when you understand what it was they were trying to do. The idea of smart people, making sensible strategic choices yet failing anyway is counterintuitive. And when they do fail, it’s not always obvious what they should have done differently. And in an industry being disrupted by larger business and technology trends, a lot of smart people are indeed going to fail. For a long time - although I think maybe it’s shifted - the fashionable view was that if you worked in traditional media like television or newspapers you were a dinosaur, both in thinking and execution. The smart people were over on the other side of the digital divide. In the agency world, the disruption is just as real. Many of those creative agencies are merging or closing not because their bosses are dumb, but because they’re making the best choice for the environment they’re in. But you can only play the hand you’ve got in the game you’re playing. And the same thing goes for writing a weekly note like this. It was a week where most people succeeded, some failed, and nothing was worth getting angry about. So it won;t be as easy to write. So after spending most of Friday poring over ASX updates, looking for a theme and not really finding one, it was a relief when a document arrived from the Australian Communications & Media Authority that brought some context to these wider trends. But before I get to that, let’s go back a month or so, when I spent some time out of the media bubble at my shack in NW Tasmania. The TV aerial was broken, the general store didn’t even get the AFR and the only mobile reception was on Telstra, a belated new arrival thanks to the Mobile Black Spot Program.. After a few days, the Screen Time app on my iPhone told me exactly how much time I’d been spending on Facebook. So I went cold turkey and deleted the app from my phone. I wasn’t exactly cut off, but I was away from all of my normal (digital) media habits. And it took some getting used to. Want to know what time the general store opens? Google couldn’t tell me. Want to know the nearest barber? The place Google recommended was long gone. Where to buy a mower? Google thought I’d need to drive for a couple of hours. Got any idea where to see live music? There was no local online guide. I needed to find a local builder. While driving, I glimpsed a roadside sign but couldn’t write down the number. Remembering his name, I Googled him later. There was no sign of him on the web. For a day or two, I was in denial that it could possibly be the case that somebody could be in business and take the time to put up a billboard, yet have no digital footprint whatsoever. I kept repeating the online search, expecting to find this builder if only I made my search terms more specific. He wasn’t there. Just because every coffee shop and hair salon has a Facebook page in metro Australia, doesn’t mean it’s the same everywhere, I was soon discovering. I was out of the bubble. Instead, I found a good (I hope) builder by asking for a recommendation in the general store, when it opened. My next door neighbour recommended a place to get a mower. I achieved that haircut when I spotted a striped barber’s pole. And I found a music night at the local restaurant by reading an article in the Burnie Advocate. Brand advertising and media consumption is different outside of the inner Sydney bubble. I’m embarrassed to say that I’ve flown over Sydney’s real heartland of Parramatta more times than I’ve visited it. So the experience was a handy reminder that many of the consumers we write about do not live the same lives as most of those in the media and marketing industry. But just how different? Yesterday afternoon the ACMA released its annual [Communications Report](, which charts how media consumption - and advertising spend - is changing. I’m usually a tad suspicious of things that get released to the media at 4pm on a Friday - traditional taking-out-the-trash timing, as every newsroom winds down for the weekend. In this case, the document is more of a splendid bluffer’s guide to the state of the media, albeit with some stats about phone interceptions buried down the back, which may explain the politics of the release timing. What the stats do flag though is that while Australia is on its way to becoming a digital-first nation, that transformation is uneven. There’s plenty of evidence in the document of the variation by age, but I suggest location would be an even bigger divider. The lifestyle gap between the city dweller and the regional Australian may be as big as it’s ever been. And it also emphasises the consequences that the bulldozer of digital disruption is delivering for the media. While TV remains the dominant advertising-funded traditional medium (with an average of two-and-a-half hours of viewing per person per day), online advertising has overtaken it. In streaming, Netflix has seen huge growth - to 3.9m subscribers in Australia, with Stan a distant second. Meanwhile in yet more evidence of the ABC’s fading cultural significance, like the ABC’s TV and radio audiences, its iView numbers are down - the only BVOD streaming service to go backwards. Soon it will be overtaken by 7plus and 9now. None of this will surprise you, but the data may provide evidence that your assumptions are correct. Data usage has rocketed, particularly on mobile. At this rate, particularly once 5G comes along, it may well leapfrog the NBN, which has now hit the 4m premises connected milestone. Mobile and wireless broadband data usage both grew by more than 40% while fixed line broadband was below 30%. For mobile broadband subscriptions, Australia is seventh in the world based on population. But 26th for fixed broadband. (The NBN’s a disappointment, isn’t it?) There are 34m mobile devices in use. Which for a population of less than 25m, is good going. A total of 96% of the adult population use a mobile phone. The 4% who presumably still don’t is perhaps the more startling half of that stat. For now, most people still have a landline phone at home. But I’m among the growing 7.7m adults who have cut the cord. Only 11m still have a landline at home. The decline in payphones has slowed though. The number across the country - 22,716 - only fell by 2.2%, although I’m sure the drop in usage was more dramatic. I suspect the fact that payphones make for excellent outdoor digital advertising inventory sites may be the real reason for their longevity. And yet, not all of Australia is on the ride. Only 89 per cent of adults are online every day. Or, more surprisingly, we can conclude that 11 per cent are not. Yet while 63% of those under-45 now use messaging apps, only 29% of those over that age do. The main free-to-air TV channels still dominate viewing, but with a declining share of 48% of viewing hours. And for those under 24, they watch more of their shows online than broadcast. Those trends are happening. And the real shift has been in advertising expenditure. Even five years ago, it was a three-way race, with TV, print media and online each taking about 30% of the ad market. In just four years, print media shrunk to a 12% slice, TV drifted down to 24%, and online shot up to 51%. The only traditional medium to grow its slice was outdoor - from 4% to 5%, thanks to digitisation of screens, I suspect. And the punters are slowly starting to put their hands in their pockets for online news. 1.69m said they’d paid for an online news subscription. But there’s no evidence whatsoever that the winners and losers in any of these shifts have been created by genius or stupidity. Media owners are in small boats on a big ocean. In most cases, all the captains can do is try to steer the boats a little. Domain’s robots One of those ASX documents I read on Friday came from real estate company Domain which [updated the market on how it’s faring](. It was the first since Nine took control of the brand as part of its takeover of Fairfax Media. The market obviously saw it as good news - despite a fall in the number of properties listed, the share price went up. When it’s tougher to sell properties, they require more advertising, so things weren’t as bad as anticipated. There are also clues about the decision to remove the humans of the media sales operation and replace them with programmatic ad sales instead. The move - which predated the arrival of ex-Googler Jason Pellegrino - was announced back in June, with 20-30 media sales jobs going. The theory goes that if you can get rid of salespeople and sell all of your advertising inventory - and Domain delivers a lot of page impressions - via ad exchange, it’s far more efficient. On the one hand, this week’s update says that percentage profit margins in the media division did indeed improve. But if you dig a bit deeper, it also admits that revenues for the division were down by about three million bucks for the half year to $25.8m. Which suggests that although the humans were more expensive, the company would have been slightly better off if it hadn’t got rid of them in favour of the programmatic robots. That’s a trend worth watching as other media owners try the same thing. Boring Enero This week also saw [Enero - parent company of the likes of BMF, Naked Communications, Hotwire and The Leading Edge - update the ASX on its performance](. This time last year in Best of the Week, I said of Enero: “These days, Enero seems to be living within its means, although at a market capitalisation of $90m, the point of keeping it publicly listed remains questionable. It reported a slight fall in revenues to $48m over the last six months for the group, from $51m the year before. But thanks to cost control and selling off its domain registration company Dark Blue Sea, Enero grew EBITDA profits from $4.9m to $5.7m. “While it may seem like something of a plodding performance, those who remember the bad old days of Photon Group, will probably prefer it. Mr Hyde may have been charismatic and dangerous, but investors probably prefer respectable old Dr Jekyll.” The plod has continued. Indeed, it could almost be described as becoming a stride. Revenue was up by a third and profits up to $10m. Long term shareholders will be happy. The company’s market capitalisation is now back well above $100m, at $124m. That’s pretty much as high as it’s been at any point this decade. It’s about 50% more than when Matt Melhuish - the M in BMF - was dropped into the CEO chair. It also shows something of a restoration of rationality to the market. Enero is no longer smaller than the owner of rival AJF, Trimantium Growthops, which has almost halved in size to an $85m market cap over the last six months. And it’s an amazing turnaround from when Enero was still called Photon Group and on the verge of collapse eight years ago. In a sector as disrupted as the agency world is - and just look at the struggles of WPP - any sort of positive performance is notable. Smart people, plodding towards success. Nowadays, I’d call Enero boring. And I mean that as a compliment. BuzzFeed’s cuts I wasn’t going to write about the cuts at BuzzFeed Australia again this week, as I risk repeating myself. But [over this week we saw some of the key departures revealed](, including GM Simon Crerar. While the operation will continue, more as a bureau than a full local operation, a lot of good people are going. It’s through no fault of their own - it’s a result of decisions made in New York, that the venture capital owners want to start seeing a profit sooner. One of the things that has always struck me about BuzzFeed is that everybody I’ve met, including a number of their international execs who’ve been to Australia to speak at our events, have been unusually nice people. Disproportionately so for this industry, and too many times for it to be a coincidence; it must be a hiring policy. If the wider media industry had as stringent a “no dickheads” policy as the Buzzfeed recruitment formula, many newsrooms would be happier places. BuzzFeed Australia’s contribution to local journalism has been appreciable. If you were of the outdated view that BuzzFeed is only about dumb-but-fun lists, then I recommend [Crerar’s goodbye post](. It’s seriously on brand. They were a helluva team. Sage advice And finally, some housekeeping. If you run or own an independent agency, please do take a look at the program for t[his Thursday’s SAGE conference](. Back in the day, I clunkily constructed the acronym based around Secrets of AGEncy Success. And nodding towards the idea of wise old sages of course. It’s not sold out yet, which is a surprise, as I think it’s a great program for anyone who wants to build or sell an agency. Please do join us. As ever, I welcome your feedback to tim@mumbrella.com.au. And my colleague Abigail Dawson - abigail@mumbrella.com.au - is on the Mumbrella newsdesk this weekend. The angle grinder is still shrieking, so I’m going out. Have a splendid weekend. Toodlepip… Tim Burrowes Content director - Mumbrella Sponsored Post The [Cooperate]( platform transforms how marketing teams visualise their customer journey, deliver content at each stage of the journey, and see how it performs - from one place. Australian enterprises like [Monash University,]( [SFI Health](, The Heart Foundation, UNSW and TicToc Home Loans can finally manage content across the customer journey, empowering their teams to visualise the entire journey from start to finish, and manage all of the marketing work in-between. Mumbrella | 46-48 Balfour Street Chippendale NSW 2008 Australia This email was sent to {EMAIL}. If you would rather not receive Mumbrella's Best of the Week email you can [unsubscribe]( or [manage subscriptions](. [Facebook]( [LinkedIn]( [Twitter](