Media: Online ads power through downturn

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Online and interactive media are being hurt in the advertising downturn - but it is a bit like a Sherman tank being hurt by a heavy downpour of rain.

The downturn that kicked in during the fourth quarter slowed growth, knocking radio, television, newspapers and magazines.

Interactive advertising also dropped 3 per cent from the third to the fourth quarter. But it still wound up the year with revenue up by an astonishing 43 per cent compared with 2007. In a report released this week, the Interactive Advertising Bureau said ad spend had increased from $135.6 million in 2007 to $193.15 million in 2008.

The Advertising Standards Authority is releasing a comparison of the share of adverting revenue for different media today. It is expected to show online increasing its share of advertising revenue from 5.8 per cent to 8 per cent.

The result increases online's big lead on outdoor advertising. And it takes it within striking distance of its ambitions to pass magazine advertising revenue later this year.

The IAB study reported that advertising revenue from search and directories was the biggest growth area increasing 75 per cent from $34.1 million to $59.71 million.

Display advertising grew from $42 million to $58.1 million. But it was not all sunshine and roses.

The IAB said online was not immune from the impact of deteriorating global economic conditions. That was apparent in comparisons between the third and fourth quarter, when the downturn hit, during which online advertising dropped by 3.19 per cent.

FAIRFAX MOVES

The Australian newspaper reports that Fairfax Media - which went into a trading halt yesterday - is considering raising up to A$250 million ($317.76 million) under an equity offer.

The Australian's website says in an unconfirmed report it understands investment banks UBS and ABN Amro are in talks with major Fairfax shareholders and other institutional investors about a raising. The report says the talks are about a share placement or rights issue with stock potentially priced at between A70c and A80c a share. Fairfax shares closed yesterday at A93c.

Fairfax said: "The reason for the trading halt is that Fairfax is currently considering capital management initiatives."

On Monday, Fairfax reported a A$364.3 million net loss for the six months to December 31 and company executives repeated assurances that it had no "present" need to raise more capital.

TVNZ TOP 50

Most media companies are battling the advertising downturn. APN News & Media, Fairfax Media and the Australian Seven Network were in the media this week lamenting the state of the market.

The same is happening in other sectors, of course, and it would be churlish to single out TVNZ for attention after last week's announcement it intends to cut $25 million off budgets by June, to compensate for the downturn. TVNZ chief executive

Rick Ellis told staff in a memo that he and the executive team "will work with our top 50 leaders in the next few weeks to look at the options available".

"I have to be honest and say these budget reductions may involve jobs but we won't know," Ellis said in the memo.

Fifty top leaders? I wonder how many they have in the lowly middle management? Maybe TVNZ can make a quick hit there rather than in news and programme budgets?

STAYIN' ALIVE

TVNZ is believed to have spent more than $80,000 on the rights for the Bee Gees song Night Fever used in its promotions for its upcoming series Dancing With The Stars.

The rights deal - that was made directly with the publisher - is understood to be on top of the $70,000-plus production costs for the television promo which is on high rotate at the moment.
TVNZ would not discuss costs but confirmed that, as a marketing cost, it fell outside TVNZ's agreement with the Australasian Performing Rights Association.

Spokeswoman Megan Richards points out that Dancing With the Stars is its most popular show, and it is important to market it and attract as many viewers as possible, so that it can boost advertising levels. And to be fair there an awful lot of TV commercials that cost more than $150,000.

Some promos are understood to have had stratospheric budgets. The Dancing With The Stars promo was handled in-house but would have cost more if it was handled by an ad agency.

And it is quite a nice promo. Television is like that - you can blow tens of thousands and have little to show for it - and if you do stuff on the cheap it can be real turn-off. Still, it seems odd for a company that is the middle of a cash crisis.

EDITOR EXIT

Departing Dominion Post editor Tim Pankhurst says the paper's coverage of the Louise Nicholas saga and printing the controversial Muhammad cartoons stand out as significant events in his seven years running the capital's daily paper.

The Fairfax man - who has edited the Evening Post, the Press in Christchurch and the Waikato Times - is to run the Newspaper Publishers' Association. The job includes running the New Zealand Press Association (NZPA) and Newspaper Advertising Bureau.

With the country dominated by two companies, Herald publisher APN News & Media and Fairfax Media, and with the growth of Fairfax's internal editorial network, there has been speculation about NZPA's long-term future.

But Pankhurst thought it was secure and that the value of the agency providing content for new digital media could also lead to a greater role within print newspapers as well.

A Fairfax insider said Pankhurst would provide a higher profile for the newspaper industry. He had a reputation with staff of being "prickly" but was regarded as successful in maintaining the profile of the Dominion Post during a difficult time for the newspaper industry.

Two names have been suggested as potential successors, Bryce Johns, editor of the Waikato Times, and Andrew Holden, who has edited the Press since 2007.

BIG SWINGING CLICKS

Copyright holders are close to stealing defeat from the jaws of victory now that the Government has delayed implementation of Section 92A of the Copyright Act. The controversial section that was to take effect next week forces internet service providers to act on allegations of internet piracy by copyright holders.

Nervous about acting as internet policemen, the telcos have been working on a new code and a system to administer complaints. But the telcos complained that copyright holders' no-compromise approach made it impossible to set up a new system - including a mediator - in time for the deadline this week.

Amid lobbying from telcos and an effective protest campaign by internet advocates, the Government delayed Section 92A until March 2 and Prime Minister John Key indicated that if the parties did not agree the controversial section might be removed altogether.

How did the copyright holders - largely the big Hollywood film, TV and music companies - turn legislative victory slipping Section 92A into the act into the failure of having it removed? Apparently there was over-confidence about their status and lack of understanding of the approach of the new Government that was not as star-struck by the entertainment industry as Labour had been.

An insider said they were infuriated by copyright holders' "arrogant" approach in talks. "The general line was that 'we won and we are not going to talk about it'," said a telecommunications industry source.

Led by music industry bosses Campbell Smith and Anthony Healey, the copyright lobby alienated telcos that were to be their new business partners. Some argue that the mishandling was because the copyright campaign had being overseen from Hollywood rather than locally.

One music industry insider noted that there was a sound case for the new rule and that telcos should pay.

But the copyright owners had made no attempt to rally support from artists and Section 92A was revealed for what it was - a big push by the global entertainment industry.

Industry groups - who were government favourites under Arts Ministers Helen Clark and Judith Tizard - underestimated the telco lobby and assumed the new Government was like the old.

While supportive of maintaining copyright, the Nats might also be concerned about the gripes and complaints from telcos and by complaints against the music industry approach and its effects on the wider business community.

- NZ Herald

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