Election year advertising might be something that makes you switch off, but the revenue streams are addictive for the media giants.

Ben Willee, Executive Director of Media and Data at Spinach Advertising, talks to Deborah Knight on 2GB Radio’s Money News, about election advertising, DAZN’s new owners and a big rumor around a potential Nine Radio selloff.

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Ben Willee, General Manager and Media Director for Spinach Advertising

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Deborah Knight (Host)

Welcome back! There is always lots to discuss in the world of media and marketing with our advertising guru Ben Willee General Manager and Media director for Spinach Advertising. He joins us every fortnight here on Money News. Ben welcome back.

Ben Willee

D’day Deb, great to be with you and the listeners tonight.

Deborah Knight (Host)

We’re deep into reporting season, up to our eyeballs in it today on Super Thursday. And we’re going to hear Nine’s half year numbers next week, the owners of this radio station. News Corp and Seven have already delivered theirs. Of course, we’re a long way from the glory days of massive profits from legacy media, but at least there’s some light at the end of what’s been a very dark tunnel for advertising. Are ad sales finally starting to pick up?

Ben Willee

Well, Seven West Media reported its worst ever half year result, with both profit and revenue taking a dive. And that’s off the back of a really soft ad market. So net profit slumped by only 68% to just under $18 million, as revenue fell 6.2% to just over $700 million. Now what was interesting was Seven with Chief Executive Jeff Howard, talked up the ad market and he was very positive for the future. Now that sent Seven West shares up. While the owner of this radio station, which also owns the Nine Network, went up massively off the back of that, I mean, approximately 14%. So in my opinion, a couple of snowballs don’t make a polar bears picnic. But it’s a very good start. And it looks like we’re seeing some green shoots in the ad market.

Deborah Knight (Host)

And the federal election will help things along, surely? How much of a boost will political ads give to all media?

Ben Willee

Yes, that magical time of the year when political parties suddenly discover the joys of advertising. You know, after three years of largely ignoring the power of persuasion they can’t get enough of it, and we’re right in the thick of it, Deb, have you seen any Clive Palmer ads recently?

Deborah Knight (Host)

Well, that’s only just the start, though. This is the thing, I mean, for consumers of media, it can be damn annoying. But for the bottom line of media companies, the bosses have got grins from ear to ear.

Ben Willee

Oh yeah. I mean, the last election, it was estimated that Clive Palmer spent between $70 and $100 million on advertising, which was extraordinary number.

Deborah Knight (Host)

And there was not a single MP that got elected into parliament. Just one I think, wasn’t there? Gee yeah, I’m not sure the return was very much a profitable one. But yeah, it’s a lot of money that will come with it.

Ben Willee

The concern I have about political advertising is it’s largely in the dark now. So you can run a campaign on social media, but if you don’t see it, did it really happen? And you can make claims in that space that are very hard for people to see, let alone verify. So we’ve just got to remind ourselves that the social media giants have a duty of care to protect us from misinformation and, you know, bad political claims in that space.

Deborah Knight (Host)

Yeah. Good point to make. Now, the government’s also given free to air TV a cost reprieve, suspending the commercial broadcasting tax for 12 months. So it’ll save about $50 million in fees. Surely, though Ben, that tax should be gone for good, considering how fragmented the media market is and when this tax was first introduced in the 1960s, a hell of a lot’s changed.

Ben Willee

Call me a cynic but recently, weren’t we talking about banning gambling ads and taking away an estimated, you know, $230 odd million dollars in revenue for TV stations? Now we’re temporarily suspending attacks and giving them a saving of about $50 million in fees. I mean, is there an election coming Deb? Have I missed something? I can’t work out what’s going on here.

Deborah Knight (Host)

Yes well, it’ll be, you know, a welcome reprieve for the commercial TV stations with costs being so important, but really at the end of the 12 month period, they’ll get slugged with it again.

Ben Willee

Well, look, I agree with free TV when they described this tax as quite an outdated and unreasonable burden. And let’s hope the government sees common sense prevail and they get rid of this tax altogether because it doesn’t get them a lot of money and it doesn’t help, you know, Australian media companies compete with global behemoths who don’t have to pay similar taxes.

Deborah Knight (Host)

Now, we’ve had Saudi Arabia take a minority stake in a sports streaming service DAZN, which is Foxtel’s new owner buying out News Corp. Is that going to lead to any changes for what viewers see?

Ben Willee

Oh wow. What a question. So the sports investment arm of Saudi Arabia’s sovereign wealth fund has put in an estimated $1.6 billion Aussie into DAZN, a UK based company. And DAZN bought Foxtel from News Corp and Telstra for a lazy $3.4 billion. So, we’re not really sure, but we think it’s about $1.6 billion they’re putting in. So when it comes to the Saudis, it’s not so much sports investment as a giant shopping spree. And let’s be honest, you know, when you’re pockets are deeper than the Mariana Trench, why wouldn’t you.

Deborah Knight (Host)

Yeah. Well Foxtel has broadcast rights to the AFL, the NRL, the cricket, the Supercars. So there’s certainly a lot to play with in that space. And we’ll watch with interest with the new DAZN owners. And a big rumour doing the rounds, is that Nine, again the owner of this radio station, is looking to offload its talk radio stations with former owner and ad man John Singleton, said to be a potential buyer. Money News, of course, would be a major drawcard for anyone. But would Nine Radio be a good buy do you reckon?

Ben Willee

Where do I sign up Deb? I want to invest my hard earned in Money News just specifically. So again, this is really interesting. The Nine Radio Stations, their listeners skew to an older audience and it’s very easy to make a case that people have mostly paid off their homes, have worked hard all their lives, are less affected by cost of living pressures, which means it’s a very valuable audience. And there’s a lot of advertisers who are ignoring that very valuable audience.

Deborah Knight (Host)

Yeah, because when they talk about the sort of demographics for the population, it’s the younger demographic that seems to be the Nirvana.

Ben Willee

Yes, and there’s a lot of reasons for that. The argument is, is that younger people are easier to change their behaviours, but the reality is, these older Australians have got all the disposable income. And, you know, John Singleton and Mike Sneesby are shrewd operators and they understand there’s a lot of benefits of radio advertising. Now if the sale happens and they bought the radio assets at the bottom of an ad cycle and the green shoots are coming, it could be a very lucrative business if it was well managed. So, watch this space.

Deborah Knight (Host)

Yeah, they’re both terrific fellas if they’re listening. So if there’s any interest, I know where my bread’s buttered. Good to talk as always, Ben. Thank you.

Ben Willee

Thanks very much for having me Deb.

Deborah Knight (Host)

Ben Willee, the General Manager of Spinach Advertising for our regular look at the world of media and marketing.