Following the recent launch of Boomtown, we scrutinize whether we are indeed under-cooking our communication to regional dwellers. Many proof points suggest there is an under-investment against what appear to be highly valuable consumers – cashed up, bigger grocery spenders – at decent scale. Therefore, are we missing a trick, what are some of the barriers and what should we to do about it?
For those of you old enough to remember, in a time long ago, there existed an industry body dedicated to the regional TV cause – the Regional TV Marketing (RTM) Bureau. Led by Brian Hogan, the purpose of this organization was to educate and validate investment into regional TV markets which has always been under-weight versus the population. For doubting clients (and media planners), this organization often would fund sales data to prove effectiveness. It was a significant investment for the Regional TV FTA networks and subsequently due to cost pressures the organization was dissolved. I personally, have long lamented its death. It was a wonderful resource (and the jolly to Byron each year was load of fun).
Enter RTM 2.0. Boomtown. Launched April 4 2019, Boomtown is a collaboration between major regional media owners – TV, radio, print and online publications – to “shine a light” on the benefits of advertising in regional Australia. The key headline:
36% of Australia’s population live in regional markets, yet only 10% of national budgets are spent there.
Key facts and figures at the heart of Boomtown’s argument
Population 8.8 million and growth outpacing metropolitan market (ABS)
5 of the 10 biggest online shopping postcodes in Australian are regional (Australia Post)
More disposable income. The average household income of Boomtown residents aged 25–54 is $93K. Combined with a lower cost of living, that leaves regional residents with more disposable income (Nielsen CMV Survey)
Regional residents spend more on their weekly grocery shop than their metro counterparts. (Nielsen CMV Survey)
Regional residents travel as often as metro dwellers, with 79% of 25–54-year olds planning to take a holiday this year. (Nielsen CMV Survey)
Despite perceptions, nearly half of regional residents aged 25-54 are employed in white collar jobs.
Uncluttered environment. Again for impact, only 10% of ad spend (national advertisers) versus 36% population
Do I agree that regional investment is under-done?
Broadly, yes. I think we are definitely missing a trick by not reaching our regional consumers to the same level as our metropolitan consumers.
I have often witnessed regional markets being de-prioritised versus metro, being cut before metro and down-weighted versus metro without clear rationale. Recently, I had a conversation with a client who hoped that using subscription TV was getting them adequate coverage in regional markets (but to be clear, STV does not provide ample reach in isolation). Or another hypothesis whereby metropolitan signal spill into regional markets would suffice (the answer to that is also no).
If I look at SMI data, 10 years ago, the regional share of investment was 13%. It is now 10%. Metro share of investment on the other hand has largely held.
I actually believe that a key barrier to appropriate investment is that we think “Metropolitan” and “Regional” in the first place rather than focusing on planning at the more granular market level when we are constructing a media plan.
However, as long as there are not any major distribution issues, this is not always the right thing to do for our clients’ business.
Here are some facts and figures of my own that BOOMTOWN has not drawn attention to in their collateral, but I feel is relevant.
Some regional markets have greater populations than metro markets. The regional TV market of NNSW is the fourth most populous market in Australia and is larger than the metropolitan potentials of Adelaide and Perth. NNSW, Queensland and SNSW are all larger than Adelaide.
Most certainly, from a TV perspective, regional CPMs are lower meaning you get more bang for your buck.
Jumping into Roy Morgan (Dec 18), Regional consumers over-index as heavy consumers of commercial TV (117 index versus 91 in metro) and commercial radio (105 index versus 97 metro)
Roy also indicates that regional dwellers are, for now, less likely to subscribe to the commercial black hole that is Netflix (92 versus 104 metro).
There exists a much greater sense of community in regional Australia and this can be a very rich territory to explore for advertisers. I recently saw some case studies for Origin Energy and Transport NSW that drew on this insight and achieved excellent business outcomes.
What are some of the other barriers to investment?
In my experience, it can be difficult to get the sales data we need to validate ROI. Clients most often do not drill down further than state-based sales information to enable us to conduct more granular CDI/BDI analysis.
Additionally, media delivery can be more difficult to validate. In fact, generally there is a real lack of interest in and investment into analyzing traditional reach/TARP/CPM metrics which I think is a problem – both from an accountability point of view, but also in that it doesn’t elevate the importance of this investment. This data access is not typically funded.
From a buying perspective as well, it can be a more labour intensive exercise – not just because of the number of markets (and markets within markets), but because many of our regional media owner systems are outdated. I’ve asked the question of our regional TV media owners whether any developments are in train on this front and the answer is yes, but it is early days. The complexity of building systems that can cope with sub-market level TV buys has its challenges.
Moreover, sponsorships – which carry premiums and generate yield for the networks – rarely are extended into regional markets (and we get the in-program coverage anyway without additional cost).
There is also perhaps the concern that focusing eastern seaboard will reduce negotiation power with the metropolitan networks.
Finally, there is a pretty major point that is being omitted from the population versus investment argument and that is the huge growth in digital. At 56% of total investment according to 2018 CEASA data, our digital activity obviously delivers reach against our regional consumers (although again quoting Roy, regional Australians are 14% less likely to be heavy internet users). If I remove national channels from SMI data, which granted is not the best representation of digital investment, there has been no change over 10 years to regional as a proportion of the Metro/Regional total. In 2008, it was 18.3%. In 2018, it was 18.4%
So, 36% versus 10% is perhaps a little sensationalized, but even at 18%, which is possibly a more appropriate comparison, investment it out of whack. Something to consider when we approach our next response to brief! Let’s ensure, where we can, that BDI/CDI always informs the media plan and secondly, let’s consider the value of post analysing our regional campaigns and how we can procure funding. Something like a comparative cost per reach by market could be a starting point in understanding media ROI, even if clients don’t yet wish to invest in a full-blown MMM study.