BotW: Lights out; Mourning The Monkeys; What next for SCA?
BotW: Lights out; Mourning The Monkeys; What next for SCA?
Welcome to Best of the Week, mostly written early on Saturday morning, at beautiful, powerless Sisters Beach, Tasmania.
The upside of living at a place surrounded by national parks and the ocean, is that it is will be a great place to fend off the zombie hordes when the day inevitably comes. The downside is that in high winds, falling trees are almost as inevitable, taking the power lines down with them. The message “check back after Saturday afternoon” for when power might return is disconcertingly vague.
Luckily the laptop’s fully charged, and I’m wearing a head torch to see the keyboard. I had no idea my touch typing had gotten so bad. More seriously though, I have been unable to make coffee.
Today: Goodbye to The Monkeys; and what we learned from the SCA results
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SCA: The disappearing agency dollars
Southern Cross Austereo’s update this week on its annual numbers followed the theme of results season - bad news, but no worse than expected.
SCA’s EBITDA profits were down to $66m (they were three times that just a decade ago) and revenue fell below the half billion dollar threshold, landing at $499m.
The biggest fall in revenue was in SCA’s TV arm which shrank from $107m to $98m. SCA’s main affiliation is with the ratings-challenged Ten, except for Tasmania where it aligns with Seven.
Also predictable was the fact that the TV licences are officially back on the market - “active negotiations with several partners” was the phrase. It’s a fire sale. The best time to sell a declining asset is immediately, even more so when they’re holding back SCA from its desire to be a pure play audio company.
That’s if ARN Media doesn’t come at SCA with yet another takeover bid. The costs to SCA of dealing with the last one were $2.9m, it disclosed this week. SCA also wrote down the value of its radio licences by $326m.
Another intriguing data point - and one I will look at for the other media companies too - was SCA’s falling expenditure on promotions and marketing, which dropped from $15m to $11m across the year. That may be explained by Listnr being out of launch phase, but comes against the backdrop of media companies reminding their own advertisers that the best way to come out of a downturn stronger is by continuing to invest in their brand.
I’ve a growing hunch that a factor that needs to be examined more closely when it comes to declining revenues for traditional media is the role being played by agency groups in accelerating their process thanks to their own self interest.
This week some of the claims being made by the Department of Justice in its antitrust trial against Google were made public. The DOJ says Google spent hundreds of millions of dollars to incentivise agencies to shift their spend to Google.
Local revenue for SCA actually increased over the year - from $175m to $176m. The reason the company’s revenues fell overall was because national spend, much of it via agencies, dropped off from $273m to $258m. There might be a benign explanation of agencies merely recommending media channels to their clients which they believe deliver the best ROI. But I wonder.
And I also wonder where SCA will be able to hold to its claims that it won’t need to do major capital expenditure going forward, now that Listnr has got momentum. Just staying compliant with developments in mobile operating systems will have a cost attached.
The big question though, is now that results season is out of the way, will we see a new wave of takeover proposals.
ARN signalled in its own results a week ago that it still sees the merits in coming after SCA again.
Could SCA’s management instead take control of their own destiny by looking at other ideas that see it become the audio component of a bigger whole?
Seven West Media comes to mind. If proprietor Kerry Stokes were to take The West Australian publishing arm out of the group, a merger of equals with the TV assets might be feasible. In Jeff Howard at SWM and John Kelly at SCA, there are two CEOs with similar backgrounds and outlooks. Both from a finance background and both with egos under control.
We’ll see what happens next.
Monkeys no more
In the end, The Monkeys didn’t quite make it to their 20th anniversary.
The most successful local creative agency startup of the last two decades, The Monkeys will become part of the Droga5 network from December.
It isn’t as much of a loss as such moments usually are. If you have to be part of any global creative network, then Droga5 would be the one you’d choose.
I got to see some of their early the rise up close. The first time I walked into the Monkeys’ original office on the edge of Redfern, co-founders Mark Green, Scott Nowell and Justin Drape - refugees from Saatchi & Saatchi - were still sharing a trestle table.
Back then they were still Three Drunk Monkeys. The rebrand to The Monkeys came with winning Diageo as a client.
Right from the beginning, the agency was different, leaning into making stuff that went beyond 30 second ads. That included a food show for SBS and a sitcom about adland for Foxtel called 30 Seconds.
The night the first episode of 30 Seconds went to air, the agency held a watch party at Bar Cleveland in Surry Hills. Mumbrella had bought an ad in the break. It was a memorable lesson that nobody watches the ads in a pub. Looking back now, that’s a good thing. It wasn’t a great ad.
Meanwhile, as The Monkeys were growing past 100 staff, elsewhere in Surry Hills, Dave Droga had his first, failed attempt at launching Droga5 into Australia.
An Aussie expat success in New York, Droga chose David Nobay, another Saatchi & Saatchi alumni, to lead his Australian creative offering. It was a shortlived, and for Droga, embarrassing failure. Nobay, an old school 90s adman failed to live up to his own legend, and Droga was forced to close the agency after a hype cycle that lasted from 2008 to 2015.
The Monkeys went on to sell to Accenture in 2017. And Accenture bought Droga5 in 2019, putting both agencies into the same family.
From that point on, that was at least two brands too many, hence this week’s announcement that The Monkeys will rebrand as Droga5 under the Accenture Song umbrella. If Accenture stays in the creative execution business in the long term (and most of the other consultancies are getting out) then one day, the name Droga5 may disappear too.
The story also takes an additional turn, with Green moving to New York to lead the entire business.
Compared to most tales of the indie-to-network, this is a more satisfying one.
Unmade Index on the up
The Unmade Index recovered a little on Friday after hitting a new low point earlier in the week. It finished up by 0.83% for the day, landing on 456.1 points.
Seven West Media was the biggest mover of the day. bouncing by 9%.
CotW: Beyond the Games
In each edition of BotW, our friends at Little Black Book Online highlight their Campaign of the Week
LBB’s APAC reporter Casey Martin writes:
Thinkerbell is not only celebrating the Australian Paralympic Team with Bupa, but ensuring them that their care will always be present.
Each spot showcases a different athlete and ends on a promise, to support them 'beyond the games.' The spot serves the brand message well, it treats all stories with dignity, and the spot itself is directed wonderfully by Dani Pearce.
In case you missed it:
On Monday, we asked why media agencies are steering their clients away from online news:
On Tuesday, we explored how the consultancies (apart from Accenture) are retreating from making ads:
On Wednesday we revealed that Disrupt Radio has not paid staff their July wages:
On Thursday we talked to demographer Bernard Salt about why lifestyle is the key to the Australian consumer psyche
Time to leave you to your Saturday.
I had also wanted to discuss the latest radio ratings and the Nine results, but the power hasn’t returned and my laptop battery is now at less than 10%. Our Telstra 4G tower also has a habit of conking out when the power is out so I think I might wrap this up while I still can.
Perhaps we’ll return to those other topics next week.
If you’d like to hear more from me today, you find me officiating in the weekend episode of the Fear and Greed podcast.
And if you’re in retail media, a final reminder: You have until 9am on Monday to get your REmade Retail Media Awards entry in.
Have a great weekend.
Toodlepip…
Tim Burrowes
Publisher - Unmade
tim@unmade.media
