Big name investors back indie media blowing away the mainstream on engagement, but can they trade to scale?
High profile media identities like ex-Foxtel CEO Peter Tonagh, Seven's David Koch and the founders of CarAdvice, who sold to Nine for $65m, are backing indie media ventures when they perhaps shouldn't. Consolidation, data and scale underpin the $15bn ad market today while indies are tapping fragmented and niche consumer interests with compelling engagement. But it's "high-touch" involvement by humans – the antithesis for brands and agencies wanting automation and efficiency. Starcom CEO Nick Keenan dukes it out with three indie media outfits opting for deep over wide - and urging industry to do better on engagement metrics.
What you need to know:
- Consumers are getting deep with niche content but much of the ad market is shifting to automation and scale.
- Starcom CEO Nick Keenan says “scale is being redefined” – parochialism and community is gathering pace through the Covid recovery.
- Indie publishers say current measurement systems are not adequate in capturing audience engagement, just scaled audiences.
- They may explore collaboration for data, trading and measurement.
If people start writing better articles instead of clickbait because we are all trading on engagement, then we are all better for it.
Niche is good. Until you have to turn a quid. For all the trust and rapport independent media publishers are building with audiences, they barely register with the big brand money set up for efficiency, scale and automation.
Instead, indies are hustling, leveraging high-touch commercial relationships and vertical knowledge to create and sell bespoke packages to progressive brands that get the niche audience thing.
But the likes of Jack Myers, a New York based ‘media ecologist’ have predicted that by 2025, only a quarter of media will be transacted based on relationships and ideas. The rest will be automated.
So can niche publishers scale in order to survive – and why should marketers care?
Starcom CEO Nick Keenan gets the dilemma – big agencies like his are often lightening rods for frustration across large swathes of the the media sector. The media gatekeepers, they say, are too focused on mass without any metrics, mindsets – or resource – for spotting and activating the opportunities in going deep. Keenan says the market must find ways to embrace the public's ongoing flight to niche and narrow but indies have to collectively find scale – which itself is "being redefined".
"There are so many wonderful areas of parochialism that are popping up where people are wanting to engage and mass media is going to find that difficult to cater for those individual groups," says Keenan. "And that's why independents pop up and find their niche. There is a there is a big future for independents if they can get to a certain level of scale, particularly in a recovering Covid environment."
Keenan says society is becoming more parochial by state, community and local council. "They're important developments and that's before we even get into the levels of diversity that are spread across society; that societal change we're dealing with and all the various movements from Black Lives Matter to gender diversity to indigenous people."
There is nothing from Nielsen and the IAB that allows us to measure engagement effectively. So if independents can come together and figure out a way that allows agencies to be able to see [that engagement] better and buy it better, then I think we're off to the races.
Engagement metrics or bust
Australia’s regional newspapers are banding together in order to drive a harder bargain with the likes of Google and Facebook, and to carve out a share of billions of dollars allocated by media agencies.
But outside of newspapers, that collective bargaining approach is unlikely to work for more disparate niches, according to Starcom CEO, Nick Keenan.
“What we value is [indies’] niche audiences and how engaged they are. So in that scenario, we are not looking for scale,” he says.
But according to Benn Sykes, Commercial Director, CarExpert.com.au; Kylie Merritt, MD, AusBiz; and Kate Watson, Commercial Director at The Squiz, brands are not currently being given the full picture because scale metrics are one dimensional. Nothing measures engagement or attention.
“Nielsen and the IAB do us no favours,” says Sykes, who is busy making CarExpert.com.au the new CarAdvice after Nine acquired and subsequently retired the latter brand in order to consolidate its Drive automotive platform (Sykes worked on CarAdvice for a decade).
“There is nothing from Nielsen and the IAB that allows us to measure engagement effectively. So if independents can come together and figure out a way that allows agencies to be able to see [that engagement] better and buy it better, then I think we're off to the races.”
In the absence of those metrics, niche publishers are left hawking internal numbers, essentially Google Analytics, to marketers – hardly a route to scale. Sykes thinks the industry, big players and small, must create the same pressure around engagement metrics as they have done for verified reach with viewability standards.
“It'll take something like that to communicate page engagement and help [marketers and media buyers] better see people's journey on our sites and our content and our media – something that just plugs into whatever tech that they have, be it DMPs or CDPs,” says Sykes. “The problem right now is that it doesn't exist.”
If Australia’s independent publishers can forge an alliance to drive the development of engagement metrics, “then that will bring about change,” says Sykes, because it would present significant opportunity to a tech provider.
“There’s nothing to stop the majors trading on engagement as well,” adds Sykes, “which will create better content everywhere. If people start writing better articles instead of clickbait because we are all trading on engagement, then we are all better for it.”
Sykes says it just requires a technology provider to grasp the opportunity. “So if there’s anybody listening out there…”
Once you get that tech stack right, then replicating it in another market or vertical is easier, because two thirds of the cost of doing the first time are gone.
For now though, independent start-ups are making good money via bespoke custom partnerships. Perhaps they don’t need to worry about the scale game.
Speaking alongside Benn Sykes on this week’s podcast are former Sky colleagues Kylie Merritt and Kate Watson, now respectively running a live-streamed rolling business news channel (AusBiz); and a curated daily news digest for women (The Squiz). Former News and Foxtel CEO Peter Tonagh is backing The Squiz while David Koch is one of AusBiz’s significant investors.
Both are taking a similar approach to commercial partnerships – often handpicking brands to work with rather than vice versa. And the results appear to be way beyond the grasp of most publishers, large or small.
Taking care of business
A bespoke approach is leading to a 50 per cent commercial success rate at AusBiz, which former Sky News Commercial Director Kylie Merritt launched in 2019.
With a team of just 16 people, AusBiz now produces eight hours of footage and 60 interviews a day – and has amassed 36,000 subscribers, with people watching for an average of 27 minutes on the live stream, and around 41 minutes on catch-up via 7plus and SamsungTV.
“[Increasing] those view times is my goal. We are building something where people will spend a really good chunk of their time engaging with us,” says Merritt.
She’s invested heavily in automation in order to run hot. “We actually only need one person to put the live channel to air,” says Merritt.
“So one journalist will switch the cameras, roll the graphics, do all the stuff that in a traditional environment could have 10-15 people in studio.
“I’m not saying we’re Channel Nine News, it’s not super shiny with all those bits and pieces going on. But it can be done with one person – and that’s a really important part of our model.”
Moreover, sunk technology costs – including an adjacent studio undertaking white label production work for business brands – mean Merritt’s next niche play, whatever that is, will be profitable far more quickly.
“We’ve invested in some of the cool stuff, and we're doing a lot more work on the production side at the moment. Once you get that tech stack right, then replicating it in another market or vertical is easier, because two thirds of the cost of doing the first time are gone.”
For now, AusBiz has three revenue streams – firstly content sales, where it offers its interviews to brands to use on their own channels, but only after they have been shot, never before. “You cannot pay to come on the show. We don’t do any paid editorial whatsoever,” says Merritt. It also offers white label production via the second studio; and also has traditional advertising and partnerships approach all of which comes direct.
But crucially, it is AusBiz coming up with ideas for shows or projects, and then picking advertisers that best fit, rather than being advertiser-driven. “Because of that, our conversion rate is probably fifty per cent,” says Merritt.
The measure is not how many people we can reach. The measure is how much they love what we do and how much they trust us.
Kate Watson joined The Squiz three years ago after a relatively short career in media. Watson spent eight years as a staffer for Tony Abbott before a stint at Australian Women’s Weekly and then Sky News before joining Squiz founder Claire Kimball, Abbott’s former press secretary and a one time Woolworths Comms Director.
Now the two have 55,000 email subscribers, with a 40 per cent open rate – far higher than the industry average.
“Seventy five per cent of our email database engage once a week, and that’s how we sell what we do,” says Watson.
Meanwhile, The Squiz’s podcasts now stand at about 250,000 listeners a week.
“We're one of the larger podcasts in the country now, but what we’re really looking at is listen-through rates; how often people are listening, how consistent the numbers are every day,” adds Watson. “So the measure is not how many people we can reach. The measure is how much they love what we do and how much they trust us.”
We don’t believe in display advertising, so we don't do it. We sell it all purely on a CPC (cost per click), and click through rates are astounding. The average is 10 per cent right the way through.
Driving 10 per cent CTRs
While both The Squiz and AusBiz are mulling how far they can scale, Benn Sykes says CarExpert.com.au, with an audience of around 500,000, has already hit a sweet spot.
“I'm an independent, I'm a niche, but I'm not small,” he says. “There's only a million people that buy a new car every year and [they are] in market [for] three months. So half a million is a big audience in the new car market... Anything more is wastage.”
CarExpert.com.au, quickly filling the hole left by Nine’s decision to fold CarAdvice into Drive, is now delivering huge engagement. That’s a result of providing “good, honest, truthful content written for the layman and the laywoman when looking to buy a new car”, says Sykes.
“We don’t believe in display advertising, so we don't do it. I don't understand why a 0.2 per cent or 0.1 per cent click through rate has ever been celebrated. They are built to disrupt – and when you're coming to a website like ours for independent, trustworthy information, why do you want an advertiser disrupting you?”
Instead, CarExpert.com.au sells contextual native links e.g. to test drives or via pricing information within published reviews.
“We sell it all purely on a CPC (cost per click), and click through rates are astounding,” says Sykes. “The average is 10 per cent right the way through. And you can imagine the conversion rate on that click is substantially higher as well. If you're clicking test test-drive, guess what, the chances are you want to book a test drive.”
Meanwhile CarExpert.com.au has recently launched a physical or experiential presence in the Northern Beaches, at Westfield Warringah, giving shoppers test drives across a broad range of car marques and models, while tracking their responses and driving patterns.
The idea is to not to provide carmarkers with leads – but instead to give them better data on why people don’t want to buy their cars, says Sykes, while giving people impartial advice and experience about which cars best suit their needs – without the partisan pressure that often comes at a dealership.
As such, Sykes sees growth continuing.
“The news [last week] that Nine is continuing its plans to turn off CarAdvice will create another opportunity for us. There is no dedicated player to automotive review content in Australia. We will fill that gap.”
Media agencies: Looking elsewhere?
If niche publishers are driving huge engagement and click through rates, are the larger media agencies remiss in ignoring them? Surely the extra legwork is worth it, given the significant upside for clients that appears to be going begging.
Starcom’s Nick Keenan says the Publicis-owned agency has “a policy internally to meet an independent that is relevant to our client at least once a month”. But he’s not sure that policy is consistently being met.
“That’s the intent, so we can find those special moments. But it is not always something that we are asked or paid to do,” says Keenan.
“So it's got to be [offering] innate value, it's got to be relevant to the client and we've got to be able to be in a position where we're a remunerated to bring that to life and – including the independent media in that as well. That's where it gets a bit tricky, is it something that we can't replicate or grab by doing a scaled paid media buy?” he adds.
“So I guess a challenge for us is, we are so far down the path of integrating paid media with the direct to consumer platforms ... Then we're being asked to bring in and look and focus on independents....and we've got to find where they fit within that."
Moreover, he says Starcom and Publicis are focusing more on customer and user experience (CX and UX) than paid media.
All that said, Keenan sees “a big future for independents if they can attain a certain level of scale”. And that doesn’t necessarily mean upending the pecking order at the top end of town.
“I think scale is being redefined. There is a milestone that needs to be reached, a certain level of size, but that varies depending on the type of audience, the type of content that they're bringing and how easy it is to engage with that audience, says Keenan.
Ultimately, he reiterates, there are far too many niches and interests for the mainstream media to fill – and those niches are multiplying in post-Covid Australia.
The Squiz, AusBiz, CarExpert and their seasoned media operator backers know this is true. All we need now are those engagement metrics and a unified interface on which to trade them.
As the world moves away from cookies and seeks new, more meaningful measures, is that beyond industry to deliver?
Specsavers head of market and planning, Shaun Briggs, needed a big brand hit to kick-start life after Covid. MAFS was hardly love at first sight. But it quickly grew – literally – as the brand, its agency AJF Partnership, and Nine’s Powered creative unit delivered a bespoke integration within weeks. For Briggs, “it’s been an eye opener”.