Media Giants Pressured as Advertising Agencies Look to Social Media

By Friend, David | The Canadian Press, May 7, 2014 | Go to article overview

Media Giants Pressured as Advertising Agencies Look to Social Media


Friend, David, The Canadian Press


Media companies squeezed as advertiser change

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TORONTO - Executives at some of Canada's biggest media companies say they're feeling the pinch as major advertisers take their money to social media operators like Facebook and Twitter, leaving the country's biggest television networks and newspapers with the scraps.

The shift is happening faster than many players expected and is a driving force behind changes across the industry as more Canadians migrate to the Internet for their news and entertainment.

On Tuesday, the CRTC released a financial report for the TV industry showing that conventional broadcasters, which send over-the-air signals, together lost more than $69 million before taxes last year.

National advertising sales took the brunt of the impact, dropping 5.3 per cent to $1.28 billion in 2013.

Today, Canada's advertising market is about $13 billion annually, crossing all platforms including TV, radio and online, according to analysis firm Solutions Research Group.

Just a few years ago, the consensus among big media companies was that restrained spending by advertisers would evaporate after the economic downturn and usher in a new era of digital advertising where banner ads on newspaper company's websites and streaming video commercials for multi-platform content became increasingly lucrative.

What happened was a little more complicated as social media companies swooped into the equation and outside forces like Google's advertising division attracted a bigger chunk of marketing dollars.

"Deals are being made on a global basis," said Jack Tomik, chief sales officer at Rogers Media, which owns a slate of television channels and magazines.

"Money is coming out of budgets for a lot of national advertisers before it even gets to this side of the border."

Advertisers partner with social media companies partly because of their massive scope that promises specific demographics and often more favourable rates.

"More and more we're finding that clients who are global want to do things on a global scale," said Fred Forster, chief executive officer of Omnicom Media Group Canada, the Canadian division of the world's biggest advertising agency.

Forster said international advertising campaigns tend to be cheaper overall.

"There are efficiencies associated with that and that's why the deals are done," he said.

In March, photo app maker Instagram secured a US$100-million contract with Publicis Omnicom that runs for a year, triggering widespread industry attention. Now, Instagram is shopping around monthly campaigns that cost nearly $1 million apiece, according to a report in trade magazine Ad Age.

Some Canadian media companies have tried to tap into these relationships by partnering with a direct competitor.

Postmedia websites, for example, use Google's advertisement technology under a revenue sharing agreement with the Silicon Valley giant, which means the owner of the National Post and other dailies receive a smaller chunk of revenues but also don't shoulder big administrative expenses.

"The technology and the number of impressions Google can drive is significant -- higher than traditional media companies are able to drive," said Postmedia chief operating officer Wayne Parrish. …

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Media Giants Pressured as Advertising Agencies Look to Social Media
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