PricewaterhouseCoopers European Media Leaders Summit

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1 PricewaterhouseCoopers European Media Leaders Summit London, November 2008 Summit Summaries Consumers: not fragmented, but empowered and demanding both personalised and mass experience 1

2 Consumers: not fragmented, but empowered and demanding both personalised and mass experiences As the range of media offerings continues to expand, consumers attention is becoming more widely divided driving up the premium for capturing the right audiences. With mass primetime audiences becoming ever more important to ad-funded TV broadcasters, and digital technology enabling increasingly accurate targeting of niches, there is a trade-off between volume and quality for advertisers. The consensus at the Summit was that there is potentially room for both and that meeting local tastes is key in either case. Several speakers stressed the need for companies to view the growing diversity of media offerings from the consumer s perspective rather than their own. This is the Martini media: anytime, anywhere, anyhow, commented Phil Stokes, UK E&M leader with PricewaterhouseCoopers. Often at events like this you hear about audience fragmentation. We don t look at it that way round. We start from the point of view of the consumer and the individual and, as an individual, I don t feel myself fragmented We used to have a command and control broadcast structure, where content was delivered in set programme schedules to consumers. You watched what you were supposed to watch when you were supposed to watch, it and you didn t have much choice. That s clearly melted away What s emerged is that we have audiences that are going in many different directions. Bob Verber, chief operating officer, BT Digital Media in any way. Instead of fragmentation, it s about ubiquity. When I want a piece of content, I want it to be platform-neutral, and to have it when I want it, where I want it, and in the most convenient format. As Bob Verber, chief operating officer of BT Digital Media, pointed out, this means the rules of the game have changed. We used to have a command and control broadcast structure, where content was delivered in set programme schedules to consumers, he said. You watched what you were supposed to watch when you were supposed to watch, it and you didn t have much choice. That s clearly melted away What s emerged is that we have audiences that are going in many different directions. All this makes the consumer harder to pin down than ever especially when targeting new and younger audiences. Bhavneet Singh, MD and EVP of emerging markets with MTV Networks International, commented: The challenges posed by younger and older demographics vary. As such, we do a lot of research to help us understand what their behaviour is, what kind of programmes they like and what kind of content they are looking 2 European Media Leaders Summit 2008

3 The younger audiences are challenging - they keep pushing you in the sense that you don t know what the next big thing will be but you ve got to try and stay ahead of the curve - so in some ways you ve got to take a degree of risk in trying to figure out what the next big thing might be and what will catch on. Bhavneet Singh, MD and EVP of emerging markets, MTV Networks International for. The younger audiences are challenging - they keep pushing you in the sense that you don t know what the next big thing will be but you ve got to try and stay ahead of the curve - so in some ways you ve got to take a degree of risk in trying to figure out what the next big thing might be and what will catch on. When it comes to content, Nick Jr is a trend leader and we continuously push the envelope delivering content that addresses kids growth and development skills. Ceding control and going local This need for personalisation involves ceding a degree of control to the consumer a step requiring change that is not just technological, but cultural as well. Erik Huggers, director, future media and technology at the BBC, said the introduction of user-controlled widgets on the BBC website was a new departure for the organisation. The idea of widgets was something that stirred up the editorial side of the BBC, because traditionally we have told the audience the way it is, commented Huggers. Now here s the new home page, the one place where more of the BBC comes together than any other servers that the BBC operates, and suddenly we re handing over control to our audiences. So audiences now decide where that news widget sits, whether the sports widget is there, and so on. This was quite a struggle internally but ultimately people said OK, this is the web, this is a new medium. As other speakers pointed put, ceding control to users also means being very sensitive to their personal space, and avoiding being intrusive. Alexandre Mars, CEO of Phonevalley and head of mobile at Publicis The idea of widgets was something that stirred up the editorial side of the BBC, because traditionally we have told the audience the way it is...so audiences now decide where that news widget sits, whether the sports widget is there, and so on. This was quite a struggle internally but ultimately people said OK, this is the web, this is a new medium. Erik Huggers, director, future media and technology, BBC PricewaterhouseCoopers 3

4 Mobile advertising, still in its early stage, has now all means to explode thanks to flat data rates, high-speed connections and high quality mobile contents. We consequently expect a significant growth over the next few months. And with the economic downturn, marketers are even more focusing on the media with best ROI results, and this will also increase their engagement into mobile Alexandre Mars, CEO, Phonevalley and Head of mobile, Publicis Group Group, said this sensitivity is especially crucial in the mobile space. Mobile advertising, still in its early stage, has now all means to explode thanks to flat data rates, high-speed connections and high quality mobile contents. We consequently expect a significant growth over the next few months. And with the economic downturn, marketers are even more focusing on the media with best ROI results, and this will also increase their engagement into mobile. A further recurrent theme was consumers liking worldwide for localised content. Peter Smith, president of NBC Universal International, commented: With content, going local is the first thing we re doing. It s not just about Hollywood sending American films around the world. Forty per cent of international audiences are watching films produced locally If you re a major studio, you re losing an opportunity if you don t produce films for the local market. There are even better opportunities in TV, where well over 90% of programmes are produced locally. The growing importance of prime-time Alongside personalisation and localisation, other speakers highlighted the enduring appeal for consumers of the shared prime-time experience. John Cresswell, COO and finance director, ITV, commented: Nine million people watched the launch of the latest series of I m a Celebrity Get Me Out Of Here. That s quarter of a million more than watched the opening With content, going local is the first thing we re doing. It s not just about Hollywood sending AmErikan films around the world. Forty per cent of international audiences are watching films produced locally If you re a major studio, you re losing an opportunity if you don t produce films for the local market. There are even better opportunities in TV, where well over 90% of programmes are produced locally. Peter Smith, president, NBC Universal International 4 European Media Leaders Summit 2008

5 You can see the extraordinary difference today between the big shows and the prime time average of ITV1 10 years ago compared to today. If you analyse any channel, anywhere in the world you re going to get similar kinds of statistics. What that s telling us as producers is that the big shows that we do are going to become even more valuable as that gap keeps growing. Tony Cohen, CEO, FremantleMedia show of the previous series That growth reflects the value of shared viewing experiences, which are becoming more precious as the world fragments. And that means they re becoming increasingly powerful and valuable to our advertisers. The continuing power of scheduled prime-time TV was underlined by Tony Cohen, CEO of FremantleMedia. During his presentation, he showed some charts demonstrating how the past decade has seen dramatic growth in the gap between the average audiences for scheduled TV and the peak audiences pulled in by prime-time shows. You can see the extraordinary difference today between the big shows and the prime time average of ITV1 10 years ago compared to today. Now, these shows are pulling similar kinds of numbers than they did 10 years ago, but they are doing a great deal more work for the channel whose share has declined dramatically. If you analyse any channel, anywhere in the world you re going to get similar kinds of statistics. What that s telling us as producers is that the big shows that we do are going to become even more valuable as that gap keeps growing. Paul Fisher, partner at Advent Venture Partners, pointed out that for advertisers this trend highlights the dichotomy between reach on the one hand and ever-finer targeting on the other. We hear a lot about volume, about reach, about the fact that if you re a brand manager for a shampoo you want to reach 10 million people during a commercial break in a prime-time soap, he commented. But where the venture industry is actually putting quite a lot of money at the moment is into technologies which essentially do the opposite. So it s saying, Look, rather than going out and hitting 10 million people, how about if we give you half a million ABC1 females in the south-east of England with a particular interest or, say, more than 3 kids. Now that is a very, very interesting targeted industry and today advertisers are not paying a premium to reach that audience. But if you believe that they eventually will, then you might believe that a business model predicated on volume will no longer have the same value. For full agenda and speaker details, visit PricewaterhouseCoopers 5