MediaCommunications

MediaCom View: Google's remit to organise the world and to annoy media agencies as often as possible has proven evidently successful in the last few years. It's a strategy that has enabled search to climb to 58% of online adspend in a market that is growing 40% y-o-y. But all aspects of online are growing, fuelled by ubiquity of broadband access, including the meteoric rise of social networking (e.g. Myspace) and video (YouTube). MSN's goal is to be digital platform you choose throughout your day for music (Zune), communication (Live - includes Messenger, Search and Spaces), entertainment (Xbox) and of course, content, (MSN portal). What you get with advertising with MSN is reach and a range of tools (including new in-game opportunities) - with Google you get the simplification of connecting consumers with content. Unfortunately for MSN, to 'Google' means 'search' and 'MSN' means 'chat', and the consumer is king.

MediaCom View: Ofcom has announced that it will allow the sponsorship of entire television and radio stations, the most significant change to sponsorship rules since sponsorship of individual programmes was first permitted 15 years ago. This amendment is clearly a step in the right direction in the drive for brands to get even closer to programme content. Whilst this will not wholly affect the main terrestrial channels it will certainly open up great opportunities for brands to take full ownership of more niche satellite channels where audiences are more targeted. In terms of impact, the key issue is to what degree individual sponsors will be allowed to be integrated across the channel whilst working within the guidelines that protect editorial integrity. Also incumbent programme sponsors will need to be wary of being hijacked by the channel sponsor. From a radio perspective it opens up a number of opportunities for brands to target "communities of interest" on more niche stations rather than broader regional/national stations. As long as the sponsor and the stations complement each other both can certainly gain from this mutual association. We will now await the regulators guidance of how this will be implemented later this year.

MediaCom View: The expansion of Archant's (the independent regional publisher) digital offering is a necessary and symptomatic response by the local press industry to a consistent reduction of revenue and profit's in the past number of years. The main reason for this slump is the rising consumption of the Internet by the UK, increasingly turning to online to access the wide variety of news, services, views and information that's available. As a result of the UK's migration online, increased broadband take-up and the geo targeting capabilities of the digital age, Advertisers are able to speak with audiences in specific localities in an engaging, accountable and ultimately effective way. Internet advertising spend has increased significantly to reflect this, with the market set to break the £2 billion mark by the end of the year and surpass national press spend. An area in which we can see this shift in particular is in recruitment, which once the preserve of local and national press is now the biggest area of UK online advertising spend, surpassing the finance automotive and travel sectors. Local press publishers, who although a little bit late to the party, (due perhaps to a 'head in the sand' phenomenon) will nonetheless be focussing heavily in the digital arena, in the hope that their digital offering stems their falling traditional revenues. Expect to see many more digital initiatives from our local press partners.

MediaCom View: Carlton Screen Advertising are predicting a 1% annual rise in revenue for the end of 2006 despite falls of 4.2% in Q2 and 10.4% in Q3. The increase is thanks to blockbusters like Pirates of the Caribbean: Dead Man's Chest and The Da Vinci Code released in Q2 that helped gain a 52.4% rise on the same period in 2005. Casino Royale also looks set to attract large audiences and thus advertisers but the cinema sales houses will not benefit from the full impact of its contribution until next year as it is not released until late November. Off screen activity has also helped boost revenue with more advertisers taking advantage of the dwell time in foyers to interact with their audience - this is particularly interesting in independent cinemas where up market cinema goers enjoy facilities such as bars and restaurants. This revenue increase is particularly welcome when other sectors are predicting decline and cinema's offering is under threat from home cinema technology and the availability of new films over the internet. Moving forward, the sales houses and exhibitors are developing initiatives to enhance this offering to ensure cinema going remains a unique experience.