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Record of proceedings

Citizen conversations series—

Advertising and the changing world

Tuesday 25 June 2013



Background

Speaker biographies

The sessions

Introduction

Getting audience attention—so much more than the spot ad!


Do advertisers and audiences want different things?

Q&A

Background


In early 2013, the Australian Communications and Media Authority (the ACMA) launched the Contemporary community safeguards inquiry to establish the core principles that should guide the development of industry codes of practice. To facilitate community discussion on this important issue, the ACMA held a number of events during June 2013 as part of its Citizen conversations series. The series featured conversation-based forums that brought together many voices on issues surrounding convergent media content.
The Contemporary community safeguards inquiry forums focused on the following issues: classification, decency, factual accuracy, balance and fairness, privacy, and advertising.
The ACMA’s Advertising and the changing world forum was held on 25 June 2013. The forum explored a range of issues related to advertising in broadcasting and featured contributions from journalists, the broadcasting industry, academics and citizens.
Themes that emerged from the forum were:

Convergence has highlighted the need for consistent rules across the industry.

Advertising connects buyers and sellers and is not inherently harmful.

Consumers have a right to know when they are being advertised to.


Speaker biographies

Richard Bean


During his career Richard Bean has worked in a variety of senior roles in Australia’s media and communications industries. He commenced his appointment as Deputy Chairman of the ACMA in October 2010. In that position his responsibilities range across the organisation but he takes a particular interest in spectrum matters, cybersafety, broadcasting content and the issues facing a networked society.
Before joining the ACMA he oversaw the legal, regulatory affairs and human resources functions at wireless broadband infrastructure owner and ISP Unwired.
He had previously held positions responsible for the legal and business affairs side of Network Ten's programming activities, and practised as a commercial, media and litigation lawyer at national commercial law firm Blake Dawson Waldron (now Ashurst).
Richard holds a degree in Philosophy and Literature (Hons) from the University of Sydney and a law degree from the University of New South Wales.

Jonquil Ritter


Jonquil Ritter is the Executive Manager, Citizen and Community Branch at the Australian Communications and Media Authority, a position she has held since December 2009. One of her main areas of responsibility is oversighting the team that administers Australia’s online hotline as well as online and broadcasting classification complaints, investigations and advice to Government. She also manages the teams that deal with broadcasting content standards, community broadcasting and media ownership and control issues. She is on the Advisory Committee of the ALRC’s Classification Review and part of the ACMA team responding to the Australian Government’s Convergence Review and Media Inquiry. Jonquil also has a leadership role in the current Contemporary community safeguards inquiry.
Jonquil qualified in Arts and Laws from the Australian National University and earlier in her career specialised as a broadcasting and administrative lawyer, culminating in her being the first General Counsel of the ACMA after its commencement on 1 July 2005.

Jennifer McNeill


Jennifer McNeill leads the ACMA’s Content, Consumer and Citizen Division as its General Manager. Jennifer has a legal background and brings a strong regulatory and consumer perspective to the ACMA. From 2002 to 2007, she was a Commissioner at the Australian Competition and Consumer Commission. Between 2008 and 2010, Jennifer was an Authority member with the ACMA where she played a key role in the ACMA’s Reconnecting the Customer Inquiry.

Russel Howcroft


Russel Howcroft joined Network Ten as Executive General Manager in January 2013. Based in Melbourne, Russel is responsible for Network Ten’s operations in Melbourne, Brisbane, Adelaide and Perth. Network Ten’s station managers in Brisbane, Adelaide and Perth report to Russel.
Prior to his appointment with Network Ten, Russel was Chairman and Chief Executive of Young & Rubicam Brands Australia and New Zealand, and also a member of the company’s Global Executive Committee.
He is a director of the Melbourne Football Club, and a board member of The AFI | AACTA organisation.

Stuart Gregor


Since establishing his agency in 2000, Stuart Gregor has since built Liquid Ideas into Australia's leading creative communications agency for lifestyle brands and brands that want to be part of the lifestyle.
Stuart is an engaging communicator on all matters communications and marketing and also has a lengthy background in food, wine, hospitality and travel, including part-owning a wine business in Victoria and a travel business in Noosa, Queensland.
A regular panellist on ABC's Gruen Planet, Stuart has a Masters in Marketing from the Melbourne Business School, a Diploma in Wine Marketing from Adelaide University, a daughter, a son, a wife, a handicap he is embarrassed by at golf and a passion for every sport imaginable. He is also the Chairman of the PR Council.

Bruce Meagher


Bruce Meagher joined Foxtel in May 2012. As Director of Corporate Affairs he is responsible for government relations and policy, corporate media management, stakeholder relations, and corporate social responsibility initiatives. He is one of Foxtel’s representatives on the ASTRA Board.
He was an adviser to the then Federal Communications Minister when the legislation setting up the subscription television industry was enacted. While at Freehills Bruce was a legal adviser to Austar and later he worked there as Corporate Affairs Director at the time of Austar’s float. He was also an executive at Optus Vision and then Optus Communications. Most recently, Bruce was Director, Strategy and Communication at SBS.
Bruce has been a director of Freeview Australia Limited, a committee member of the International Institute of Communications (Australia) and a member of the Federal Government’s Digital Switchover Taskforce Industry Advisory Group.

Sean Hall


Sean Hall has been with Telstra for 5 years. As the General Manager for Brand Channels he’s responsible for the brand experience for both customers and employees.
Career highlights include managing the complete roll-out of Telstra’s new brand, working with explorer/director James Cameron to connect the DEEPSEA CHALLENGE expedition to the world and partnering with the City of Sydney to make the NYE2012 event more connected than ever before.
Sean has a passion for fitness and has appeared in 4 exercise DVD’s with celebrity trainer Michelle Bridges from The Biggest Loser and www.12wbt.com

Cathy O’Connor


Since joining DMG, Cathy O’Connor has been involved in the completion and evolution of the national Nova network, including the launches of Nova Adelaide and Brisbane, as well as the smoothfm stations. DMG Radio brands are also now syndicated both domestically and internationally.
As CEO, Cathy works with the DMG senior management teams across Australia with the goal of delivering new levels of innovation and creativity in commercial radio and digital to both listeners and advertisers.
Cathy has also led the diversification of DMG into new mobile and digital businesses including an Australian joint venture with the music streaming provider Rdio, and the launch of the radio industry’s first mobile offers platform ‘Shoppernova’.
Cathy has served on the Board of Commercial Radio Australia since 2006, and held the role of Chair from 2009 to 2012.

Tim Burrowes


Tim Burrowes is the founding editor of Mumbrella which launched in December 2008. He is also editor-in-chief of Mumbrella’s sister magazine Encore and editorial director of parent company Focal Attractions.
Focal Attractions also runs industry intelligence tool The Source (previously known as AdBrief); Mumbrella360, which was named Conference of the Year at the Australian Event Awards; CommsCon, the event and awards for PR and communications professionals; the Festival of Branded Entertainment; Mumbrella Digital School; and Mumbrella Social Media Academy. The company also publishes books including the Mumbrella Creative Agency Review and the Mumbrella Media Agency Review.
There was also a time when he worked on newspapers. But that was back before computers.

The sessions

Introduction


Mr Richard Bean, Deputy Chairman of the ACMA, introduced the Advertising and the changing world forum, noting that ideas from the forum would feed into the ACMA’s Contemporary community safeguards inquiry. He said the purpose of the inquiry is to consider the core principles that should guide contemporary broadcasting codes of practice.
Richard observed that one of the drivers of the inquiry is the considerable change that has occurred in broadcasting in the last twenty years. Nowhere is this more evident than in the many choices viewers now have for accessing content and in the impact of these choices on creativity in advertising and the business models that support it.
Richard noted that relevant provisions in the current codes included transparency in advertising and time limits.
Richard referred to the issues paper that had been released to inform the inquiry and highlighted several questions for consideration at the forum, including:

How important is it that audiences can distinguish advertising from program content?

Are the current code provisions relating to time limits too complex and difficult to apply in practice?

Is there a ‘natural conflict’ between advertisers and audiences, as was described twenty years ago in the explanatory papers to what is now the Broadcasting Services Act?

Is advertising better integrated or kept on its own as the traditional ‘spot ad’?

Are the different business models represented across the broadcasting sector well supported by the current codes?


Getting audience attention—so much more than the spot ad!


Mr Russel Howcroft, Executive General Manager of Network Ten, gave an overview of advertising on commercial television. Russel’s main points were as follows.

Russel was surprised to hear the use of such language as ‘safeguards’ and ‘conflict’ between advertisers and viewers—that is not his starting point in approaching the issue. He described himself as an ‘advertarian’—linking the power of advertising to influence society with libertarianism and freedom of speech. Television’s power is that it makes it possible to communicate with millions of people and it is relatively cheap.

Advertising is not in conflict with the audience. For decades, advertising has been an enjoyable part of programming. He showed an advertorial example with Bert Newton and Graeme Kennedy advertising Kentucky Fried Chicken, that, he said, was humorous and enjoyable.

A starting point is to make a decision about the consumer—are they stupid or smart? This decision has an impact on how advertising is approached.

Creativity should be constrained as little as possible—Australia needs creativity unleashed in all its forms. We are selling something—but let’s have some fun with it.

The genius of media is the idea of time—the notion that you can sell time is clever, but time is also perishable.

In the US, broadcasters make money out of fast forwarding, while in Australia we only monetise live viewing. Advertisers should pay for PVR time. Advertising that is fast forwarded still works because you can still see the brand and some may stop and watch the ad.

He then raised for discussion several issues that are now affecting advertising in broadcasting:

Cost of Australian production. In 2012, of the top 20 shows, Revenge at No. 8 was the only one not made in Australia. It is good that there are Australian voices on broadcast television, but Australian shows are the most expensive to produce. It costs $600,000 for one hour of prime time television and you cannot always recoup that money with advertising.

Increased channel choice is good for consumers. Imagine television when there were only three channels and no remote control!

Media buying businesses are powerful voices. There are some consolidated buying groups.

Ratings now come out each day. This shows the relentless measurement driving advertising. The market performance of the broadcasters is under constant scrutiny.

Advertising creates movement in the economy by matching buyers and sellers.

The second screen (e.g. smartphones and tablets) can be powerful for advertising.


Do advertisers and audiences want different things?


As an introduction to this session, a vox pop about how the public see advertising was shown to highlight a range of citizen views.
Mr Stuart Gregor, founder and Creative Director of Liquid Ideas, then facilitated a panel session, featuring:

Mr Russel Howcroft, Executive General Manager, Network Ten

Mr Bruce Meagher, Director, Corporate Affairs, Foxtel

Mr Sean Hall, General Manager, Brand Channels, Telstra

Ms Cathy O’Connor, CEO, DMG Radio Australia

Mr Tim Burrowes, Editor in chief, Mumbrella.

The following is a summary of the themes that emerged during the panel discussion.


Is there a conflict between advertisers and the audience, or can they coexist happily?


The panel largely agreed that advertisers and audience can coexist happily.

Bruce Meagher said that advertising is the bedrock of the industry. Commercial enterprises need to sell subscriptions or advertising to pay for production. Broadcasters may not get it right in every case, but that does not entail a conflict from a first-principles view.

Russel Howcroft agreed that there is a need for rules of the road, but the starting point should not be a perceived need to protect consumers from advertisers. Advertisements play an important part in informing the consumer and can be just as important as editorial. The consumer knows the contract: if I listen to the advertisement, I get content for free.

Tim Burrowes pointed out that the interests of advertisers and consumers often line up, but not always. Consumers may not be stupid but they are also not terribly well informed about how the media works.

No time limits on radio - how do you gauge when a consumer gets fed up?


Cathy O’Connor argued that audiences hate bad advertising, so broadcasters need to be creative to make advertising more entertaining. The complaints are not that the advertisements are there, but that people don’t like the content of the advertisement. Media outlets need to evolve to meet the changing consumer appetite and if they are not entertained, people will go somewhere else.

Cathy said that examples of creative advertising include moving away from the 30-second silo ad to mobile apps.


Are time limits fair? Are they too complex?


Russel Howcroft suggested that time limits are too complex, especially in prime time.

However, consumers are used to watching 15 mins per hour, so if time limits were increased and more advertisements were broadcast, viewers might turn off.


Product placement


Tim Burrowes pointed out that product placement can be done well or badly.

Cathy O’Connor said that brand-funded content provides opportunities for broadcasters to produce better content. For example, brand funding meant radio personalities Fitzy and Wippa could afford to go to Queenstown. There were no audience complaints because there was such a natural fit between the programming and the advertising.

Bruce Meagher agreed that product placement is not a problem as long as it is editorially appropriate and transparent. Standards should also be appropriate to the content. Product placement can be easily and harmlessly integrated into a lifestyle program but not a serious documentary program. The middle ground is a drama program.

Tim Burrowes argued that you need more than a caption at the end to identify product placement. Free-to-air television should be held to a higher standard because it is broadcast on the public airwaves.

Russel Howcroft said that branded content is extremely difficult to do in practice—you need all the stars to align with brands offering money and a channel willing to place their products.

What is the model to fund prime time shows now?


Russel Howcroft: The model is the same. Selling advertising is a key asset, and the power of free-to-air television remains. ITV has had some success with producing advertisements for clients in house. Channel 4 has a creative division to help clients produce ads. He suggested that this model could be pursued in free-to-air television here. Australian radio does it, and the television channels already produce their own promos.

Stuart Gregor suggested this was like supermarket home brands.

Sean Hall noted that Telstra has no immediate plans to become a production house, though it does produce case-study material in house to demonstrate products.

Impact of new technologies


Cathy O’Connor pointed out that as audiences fragment, advertisers have come to realise the benefits of cross-media platforms. Advertisers now brief all media platforms in the same room together, where radio used to be briefed individually.

Cathy argued that regulation needs to give advertisers and broadcasters more freedom to respond to these changes.

According to Cathy, streaming music has had an impact on radio. Consumers are enhancing their experiences with new technologies, but free-to-air radio will not be replaced. Broadcast radio has personalities and local content which connects with consumers.

Russel Howcroft said that the genius in Zeebox (or Fango, etc.) for broadcasters is that the television is still the focus (i.e. the first screen). 40% of tweets are about what people are watching. As you watch television you can engage in a conversation with others, look at the recipes and find out more about the talent. This leads to a richer experience.

Are non-traditional methods and ‘viral’ advertising a threat to traditional methods?


Stuart Gregor pointed out that some campaigns are now almost exclusively in the digital environment, for example, ‘Dumb ways to die’. Tim Burrowes argued that this is not a threat to traditional advertising because there is no magic ‘Go viral’ button. Digital campaigns include a large element of chance and this is the difference from traditional advertisements [where viewer numbers are more or less predictable].

Cathy O’Connor agreed that to go viral you need to be where people are. We can use these methods to raise our ratings on broadcast media. In 2012, two of the top-ten most-watched viral videos on were from the Fitzy and Wippa radio show. The broadcast audience grew as a result of these videos.

Cathy also said that disclosure rules disadvantage radio in comparison to television because the audio eats into the program content. It also creates a piece of content that audiences don’t want to hear: it doesn’t work for anyone. It could be replaced with a visual sign on apps or the website.


In summary, can audiences and advertisers live together happily—any particular concerns?


Bruce Meagher argued that the ‘P’ symbol used in the UK for product placement is problematic: you would spend all your time trying to work out which objects the ’P’ applies to.

Bruce Meagher said that subscription television is a different model from free-to-air television. Most funding comes from the subscription base; advertisements represent less than 10% of revenues. They are sensitive that subscribers are already paying for their service. When they reduced their advertisements, consumers noticed and there was positive social media commentary.

Cathy O’Connor said that radio, to stay viable, needs to be able to move with consumer trends in advertising—that is towards integrated advertisements. Ultimately, advertisements are content. If the content is bad, you get no listeners. So regulation should support broadcasters to allow them to make good content.

Q&A

Ms Jennifer McNeill, General Manager of the Content Consumer and Citizen Division at the ACMA, moderated a Q&A session with the panel members and speakers on the effectiveness and scope of the provisions on advertising in the codes.
As an introduction to this session, a vox pop was shown to highlight a range of citizen views on advertising and on product placements in the media.
The session included questions from the floor and questions submitted through twitter and Facebook. A summary of the discussion follows.

Who are the code provisions on integrated advertising designed to protect?


Stuart Gregor argued that most integrated advertisements are harmless. Russel Howcroft agreed. They are another means of connecting buyers with sellers.

Bruce Meagher argued that this is a question of editorial judgement. Broadcasters are good at making appropriate decisions because they want to build audience trust. Losing this trust would ruin their business. Russel Howcroft pointed out that media owners and production companies have debates about this every day to ensure product placement will be appropriate.

Sean Hall said that integration should be relevant, credible and high-quality.

Tim Burrowes pointed out that bad placement is very transparent, but when it is good, it is harder to tell and consumers should be notified. They have a right to know when they are being marketed to.

There was some disagreement about live crosses in the news to a person who represents a financial company and who gives information about the stock market. These spots are funded. Tim Burrowes argued that they are players in the market and thus should not be included in the news; Russel Howcroft replied that it is not a problem if the report is restricted to the facts.


When should disclosure occur?


Cathy O’Connor said that sometimes integrated advertising is so obvious it is already disclosed.

Stuart Gregor argued that clear product identification is not needed—it is a minefield of over-regulation and decreases the enjoyment of the viewer. Regulation is only needed if the advertising encourages bad behaviour.

It was agreed that context is important. Stuart Gregor said that a sponsorship spot on the weather is different from one on the news. The latter would create a huge backlash. Bruce Meagher suggested that there is a gradation from infotainment where the product is already integrated and there are no illusions about purpose of the program, all the way up the chain to news. News needs strict editorial guidelines that protect the integrity of the service. Programs like documentaries need disclosure of funding sources.


Is children’s programming in a different category?


Stuart Gregor said that alcohol, gambling and kids are the three problem areas. There is already sufficient legislation about advertising to kids, and a high level of industry concern to do the right thing.

Russel Howcroft argued that some kids’ shows are made not because they are commercially viable but because of government content quotas. They said that this would be improved if there were more advertising opportunities permitted in kids’ television shows.

How do you regulate in a converged world? Can we set any principles?


Russel Howcroft said that the success of the internet is due to it being free with no constraints. This is a conundrum as it is likely the internet will be constrained too.

Tim Burrowes argued that it is too hard to regulate the internet—so we should regulate only when harm is done.

Cathy O’Connor said that regulations for content can be burdensome, and this makes for a worse audience experience. The convergence review touched on this issue. Regulation should be determined by the size of the enterprise. Those who command larger audiences should continue to be held accountable.

Tim Burrowes said that it is impossible to come up with an entirely logical framework. However, there is a basic principle deriving from the contract between the public and the owner using the public airwaves. If the transmission is not through public airwaves then there is an argument for self-regulation. We are in a transition between these two regimes, but the principle remains.

Sean Hall noted that the industry does have self-regulation through the Interactive Advertising Bureau. Even where there are no formal rules in place, most advertisers adhere to existing guidelines from other platforms.

Russel Howcroft said that the rules on time limits could be simplified. For example, the digital channels could be rolled up into the one framework and 15 or 16 mins per hour allowed.

A citizen raised the point that this conversation has sounded like industry specialists defending their position. Aren’t there positive sides to regulation? What about integrity?


Tim Burrowes pointed out that industry does self-regulate in many ways. The Advertising Standards Board is self-regulatory and does a good job.

Bruce Meagher argued that there is nothing wrong with advertising or with commercial activity. Regulation is called for only in cases of market failure or to prevent harm. You should not regulate simply because you don’t like advertisements.

Stuart Gregor said that most advertisements are about changing your brand choice. There is no harm there—most harmful things are regulated against.

Sean Hall agreed that advertisements are not all-powerful—people still talk to their friends before making a choice.

Another citizen objected that advertising is also about power—looking to exploit and psychologically manipulate a consumer. It is more than just ‘changing brand choice’. In this context, regulation is important to ensure community standards are met. The Broadcasting Services Act also requires that these standards are met. There is a contract between the consumer and advertiser—you should know when you are being advertised to. This requires disclosure and transparency. Advertisements should also be accurate, fair and factual, even with the audience expectation that advertisements will include ’puff’. Integrity doesn’t just mean integrity of the creative content to ensure viewers don’t switch off. It is also about integrity to ensure community standards are met.


Has the audience changed and if so what is the impact?


There was disagreement about how savvy people are about how advertising works. On the one hand, kids now learn about advertising in school, and The Gruen Transfer has educated audiences. However, Tim Burrowes argued that there are plenty of people who are not that savvy and nor should they be expected to be. You would need good evidence to regulate on the basis of audience knowledge.



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