Show notes
In today’s podcast episode of Unmade, I chat to Michael Stephenson, sales boss of Nine.The timing was ahead of this week’s Nine annual general meeting and, coincidentally, just after Stephenson celebrated ten years in charge of what is now the country’s largest media sales operation.The discussion covers the ratings year, the rise of ad-supported streaming, the rival networks’ techstack battles and the move to a national sales operation.During the conversation, Stephenson reveals that from July 1, WIN staff will become Nine employees. I think that’s new info. At the time of Nine’s 2022 upfronts back in September, the company announced it was integrating its sales team with that of its regional affiliate WIN Corporation, but did not spell out that the staff would change employer.With WIN represented on the Nine board by CEO Andrew Lancaster, and WIN owner Bruce Gordon now Nine’s biggest shareholder, it’s starting to feel like we all failed to notice that there had been a virtual merger between Nine and WIN, rather than a traditional affiliate deal.And also new, was that it felt like Stephenson went further in acknowledging how bad the impact of the cyber attack was, than Nine has done previously, including the need to rebuild its SME platform Voyager.Transcript:Tim Burrowes:Welcome to the Unmade podcast. I'm Tim Burrowes. Nine's Annual General Meeting takes place on Thursday. It's been an unusual year for Australia's largest local media company. The second half of a pandemic, a change of CEOs, a ransomware attack. Just some of the things that you don't usually see. The man in charge of keeping the revenue ship afloat is Chief Sales Officer Michael Stephenson, who joins me now. Welcome, Stepho.Michael Stephenson:Thanks Tim. Thanks for having me.Tim Burrowes:Now, before we talk about this year, I noticed looking on your LinkedIn profile that you've just celebrated your 10 year anniversary since becoming Director of Sales for Nine, which was back in September 2011. Now that was long before the merger with Fairfax, of course. I think it's fair to say that Nine was kind of in the doldrums back then. The banks were circling. There were a bunch of ratings misses. What did you think you were getting yourself into?Michael Stephenson:Gosh, well, thanks for reminding me that it's been 10 years. I would not have remembered that myself. Oh, you know what? I've always loved media and I've loved television. And of course I've been in this role for 10 years, but I've been at Nine now for 15 years in a whole range of different roles. And I love Nine. I'm very passionate about it. But as you rightly point out, a lot has changed since that moment. We were recovering as a business at that particular point in time. We would've had two linear TV channels, I think back then. NineMSN would've been a business.Michael Stephenson:And of course you fast forward to today and we are Australia's largest and most diverse media company. We have a whole range of assets and we've evolved from being just a content business to a content data and technology company. So, we've really positioned ourselves well, I think, for the future. I've been very fortunate to have been a part of that and been involved in a lot of those decisions. And so it's been a pretty fascinating journey. And mind you, I think the next part of it's going to be equally as exciting. There's a lot of incredible things just about to happen.Tim Burrowes:Well, before we look too far forward, let's talk about 2021. Which also was unusually an Olympic year. Seven had the rights. How does that influence your sales strategy for the network? When you know that there's this big lump, which is going to drag some revenue into the TV sector as a whole, but also it's going to change how you plan for the year. How do you think about it?Michael Stephenson:The Olympic games clearly is a significant one-off event. It happens every four years, but whilst I enjoyed watching it we don't spend that much time really thinking about what our competitors are doing in and around that space. We've got our own business. We think about our content and the consistency of that content through the year. It starts with the Australian Open, goes right through until December. We're way more focused on what we're doing than what others are doing. And of course, next year it won't be there and we will continue on. From a TV point of view it's about having that consistency of ratings delivery right through the year. Whether that's news or whether that's sport or whether that's our entertainment formats. I think advertisers really want consistency of audience delivery. And I think that's been our great strength.Tim Burrowes:And we're kind of approaching that point in the year. Hey, maybe we're even here with the AGM coming up. We're certainly approaching that point in the year where we start calling winners and losers in the ratings. Winners for the year et cetera. It strikes me that it's become a lot more complex now. So we have network share, primary channel share, total viewing, including catch up and BVOD. Metro versus national, the different demographics. Of a morning, you have to look at one number first. Which number do you look at first and why?Michael Stephenson:You say it's complicated. I actually don't think it's complicated. I actually think it's pretty simple. We have ratings from the 1st of January to the 31st of December, every year. We have ratings for all of our channels. From the moment we start broadcasting in the morning to the moment where we're finish in the evening. And so if you think about all channels all day, against the thing that matters to advertisers, which is demographics. And in particular three. 16 to 39 year olds, 25 to 54 year olds and grocery shoppers with children. That is the vast majority of advertising campaigns are bought against those demographics. Then we are the undisputed leader. We win in all of those demographics. This will be our sixth year of dominance. And so I look at it through that lens.Michael Stephenson:Now of course, at different times, different agencies or advertisers might look at specific segments. Someone might look at primetime on the main channel as an example, because it's where they spend the vast majority of their money. If you look at it through that lens, we're the leader again, 16-39, 25-54, grocery shoppers with children. We'll win that as well again for the sixth year in a row. So however people want to look at it, I think that's fine. We win in all of those, against every one of those metrics. And I think that's really important to advertisers. It's what they buy. They're looking for a return on their investment. And with us, you get scale because we're the leader. Scale because we're number one. And a consistency right through the year.Michael Stephenson:The metric is really simple. 1st of January, 31st of December, all channels against the demos. Now, as you mentioned, the Olympic games earlier on, of course, what advertisers do, and marketers, is they exclude one-off or special events. And as I reference, the Olympics. Wasn't their last year. Won't be there next year. And therefore, or it's excluded from any analysis.Tim Burrowes:Although I'm sure Seven would argue differently, obviously.Michael Stephenson:We can't really argue it. That's been the way it has been forever. And it makes complete sense because when marketers are making decisions around their advertising investment, they need an apples for apples comparison. And so they compare one period to were another period and you remove one-off events. And last time I looked, Tim, that was a one-off event.Tim Burrowes:And one of the things I'm curious about is you... Hey look, we're recording this not long after the ratings will have come in for this morning. What do you look to first? You open your phone. Do you just look at how a show from last night did? Because there must be something you look for first. Where would you usually go personally?Michael Stephenson:Straight to the top. Overnight ratings are still incredibly important, but I think everybody does need to realize that they're only a part of the story. So, in the morning when I get the ratings report come through, I go straight to 25 to 54 year olds. I look at how many shows we had in the top 10, what our share of the evening was against that demographic. And importantly, I look at what percentage of our total audience was against the demographic. Regularly, we are somewhere between 50 and 60% of our total audience is in the demo. And that's really, really important. So that's where I would go to first, every morning. Followed very quickly by what happened in live streaming and what happened on demand for the previous day as well.Michael Stephenson:The notion of total television is a real thing. It is the future of television. The ability to connect with audiences as they consume content, either via the live signal, via a live stream or on demand. So when we're thinking about the success of a particular piece of content, you've got to look at it across all of those platforms. There's some great examples. Love Island right now, of course is on air and on 9Now. Episode number one has just ticked over 800,000 viewers. Of course, on demand and live streaming viewing is the major driver of that audience number. So looking at it holistically is critical and really important.Tim Burrowes:Love Island is a really interesting example, I guess because it skews to a younger audience. That show's probably a really good indicator of where the trends are going. And as you say, there are some episodes now where there are more people who've watched it on BVOD, broadcast video on demand, than watched it when it went out on linear TV. Assuming we take that as the sign to come, how should did that affect how marketers and media agencies plan and how you trade with them, as that becomes the new reality?Michael Stephenson:I think it's a really interesting point, because I'm not sure that's the reality for everything. I think what's interesting about Love Island, when we played on Channel Nine, if we played at 8:30 or 9:30 or 10:30, it actually doesn't change the audience profile at all. And the reason why that is, is because they're the people who are viewing that content, they're what I would call fanatics. They are lovers of Love Island and so they find it.Michael Stephenson:Now, of course, increasingly because of the demographic profile of the show, it obviously skews a lot younger. They are increasingly watching it via our live stream or on demand. But if you think of about tent-pole shows or sport or news, and the like. Whilst people will increasingly view on other platforms or connected devices, the foundation of that yesterday, today, tomorrow, and for probably as long as we can see, linear television will still be the foundation and the driver of audience. And that's really important if you're an advertiser, because when advertisers are buying advertising campaigns, they are trying to maximize reach. And of course, they're trying to do that efficiently. And so I think the challenge for advertisers, and it's why VOZ is clearly so important, is what is the mix of advertising in both linear television, within a live stream and on demand, to maximize your reach and do that at the minimal cost?Tim Burrowes:VOZ, for Virtual Australia, the overall measure.Michael Stephenson:That's right. There is an optimal allocation of funds across all of those platforms, which will allow you to maximize your reach and reduce the cost of every incremental reach point. And that is of course the role of media buyers. And so you're increasingly seeing people talking about total television for those two reasons. And I think that's fascinating because that is the science, if you like, in media buying. The ability to analytically make decisions to maximize those returns, I think is really important.Tim Burrowes:Well, we are well into the final quarter now for the ratings year. Any more twists to come? Or is it pretty much, do we know where we are now do you think?Michael Stephenson:I think in terms of who is the leader? Who is the number one network against those demographics? I think that race has run. And of course that's us. We're the leader by more than two points against 16 to 39 year olds. We're the leader by almost four points against 25 to 54 year olds and over four points against grocery shoppers with children. So we will, once again like I said, win the year. That's really important for advertisers because it's how they will allocate their investment into the following year. But there are still twists and turns.Tim Burrowes:In fairness to Seven, we have to note that they'll win total people though. Not that you care about that?Michael Stephenson:No, absolutely Channel Seven will win total people. And we will come second against people 65 plus. So we won't win those two. But the things that advertisers buy, those three demos, we will win that. And to your point around, are there more twist and turns? There are because Parental Guidance has got off to a cracker of a start. So there's some really interesting stuff coming over the next couple of weeks in that show. And then of course we've got the Lego Christmas content and we obviously have Snack Masters. So there's a lot of premium Australian content to come on Nine between now and Christmas.Tim Burrowes:The Block's obviously gone well in the end, but did it give you a bit of a scare when it started slowly this year?Michael Stephenson:This is not new news, but these types of formats generally have a hockey stick shape to their audience performance. So they start strongly, after the course of the two or three weeks, you see the audience come back a little and then of course you see that build towards the finale. And that's exactly what we've seen again. We've had many, many, many seasons of The Block. It is got to be the most valuable show on television because audiences love it. Increasingly they love it across all platforms. And brands love it as well, because it's a show built for brands to integrate into. And this season didn't disappoint in terms of, I would say, innovative integration and brand storytelling that we brought to life. It's been another great year for The Block. And next year, of course, it goes to the bush. So more twists and turns.Tim Burrowes:Let's talk about Galaxy. So you've invested heavily in allowing brands to effectively match their own first party data. And to then make looking to cross the network, everything apart from maybe channel primetime. You announced that in Nine's upfront this year. Seven and Ten made similar announcements. One thing I found myself sort of thinking about from the outsider perspective was that, once you heard from everybody, it's actually quite hard to tell what's real, what smoke and mirrors? And I'm not sure that's necessarily a good thing for television as a medium as a whole. So you're a board member of ThinkTV, the industry body for television. Are you yet in a position where you can speak as an industry, as a whole, clearly about what television actually is able to offer across the board towards marketers' tech stacks?Michael Stephenson:There are a whole range of projects ongoing at an industry level, whereby Seven, Nine, Ten and Foxtel can come together to make the transaction of television easier, if you like. We're doing a lot of work with third party software suppliers right now. Ensuring that all of the agency systems of Oz ready. And we're doing that as an industry. The ability to standardize things like file types and the technical transaction of data between TV company and agency. All of these things are happening in the background. Will that be one system that everybody can access to buy television? And the answer that is no.Michael Stephenson:And therefore Seven, Nine, Ten and Foxtel are either building or licensing their own. Of course for us, it's Galaxy. That is a real thing. It exists. And we have some agencies placing up to 70% of their off-peak and multi-channel bookings through that platform. Fully automated, no makegoods, no shortfalls. It's the future of how you would buy television. And it's here.Michael Stephenson:Of course, in our upfronts, we made some more announcements. We want to make it even more accessible to people. We are in the process of opening up all of our live avails to all of our agency partners. So they can see exactly what is available to be purchased, make that transaction more simple. And of course, we're giving them direct access into this system. They'll be able to come in and create and place their own campaigns directly into Nine Galaxy.Michael Stephenson:We spend a lot of time talking to international technology companies who are fascinated by what we've built. You asked me at the beginning of this podcast, "God, I've been here 10 years. Was it what I expected?" Well, of all of the things that we've achieved in the last 10 years, I think the development of Galaxy has got to be one of the things that I'm most proud of. Because we went into the globe, looking for a piece of technology and it didn't exist. And it doesn't exist today, so we built it. And it's great to see the other guys also taking the investment in technology seriously, because it's a big part of, I think, the future of all of our businesses.Tim Burrowes:And do you think in their upfronts they gave the market a fair impression of how far advanced they are with their own progress?Michael Stephenson:I didn't see all of it. I don't know, it feels like it's right. I'm not sure. I'm not close enough to their businesses to know exactly what they are doing. But I think what is obvious is, the future of television is automated, it's addressable and it's a total television ecosystem. So you need to have a platform that takes the laborious, heavy lifting of buying 30 second ad spots away from media buyers. That's not efficient. So you need to automate it. You need to be able to buy against your first party data asset and you need to be able to buy live, live-streaming and on demand. And Galaxy does all of those things. And of course, as I announced that our upfronts we're obviously, as we speak, building it for regional television. So we will not only have world class technology, you'll be able to buy metro, regional and BVOD all from one stack.Tim Burrowes:We'll come to that WIN arrangement in a moment. Just one more question on the technology first. You talked about building stuff yourself and I was really interested when you announced it. Voyager the effectively self service platform for smaller advertisers. Now, I think it was somewhat disrupted by the ransomware attack. Is it back on track now?Michael Stephenson:I love Voyager and our focus on the SME market. I kind of feel like it's a little startup sort of incubating alongside us. So you're right. It was impacted by the cyber attack. We're in the process of rebuilding that. So it can sit in the cloud obviously. And we're building that app today. You're able to access television, radio and BVOD through Voyager. But I think what's obvious to us as we're learning, is the SME market, of course, predominantly today use search and social. So what we are building at and will happen over time is the ability to connect with our digital audiences through Voyager. Because I suspect for small businesses, not so much medium enterprise, but for small business, their first exposure or experience with Nine will be through digital. And then it'll build through radio and ultimately end up in television. As small businesses become bigger businesses, clearly television becomes the utopia. So we're building that out for that particular reason.Tim Burrowes:Well, you alluded to regional just now. Now Seven in the last week or two announced the Prime takeover, which gives them a kind of nationally owned offering. You had already talked about having one sales team with WIN as Bruce Gordon's WIN has become increasingly close to Nine as an organization. He's a shareholder. In terms of the practicalities, when you saying one team, how much of one team is it? I suppose what I think about is, if you tell your sales team what to do, they've got to do it. With WIN's team are you telling them, or are you asking them?Michael Stephenson:I would like to think that I'm not telling anybody anything, but working collaboratively with all of the guys and girls that work in our team across the country. I guess there are a couple of stages. The first stage is what we're doing right now, which is, I would say we've aligned our teams. And so all of the WIN sales team are co-located in our offices around the country. We've invested in resource, into trade marketing, into Powered to ensure that the Nine story can be told in both metro and regional markets.Michael Stephenson:We are increasing collaboration between both the metro and the regional teams. And we're just working more closely together. And of course there's great efficiency and opportunity in doing that. But it'll only get you so far. So stage two, which will happen on the 1st of July, to answer your question, is that all of the WIN team will become Nine employees. So they are a part of the Nine team. And Nine will be responsible for representing Nine's assets in regional Australia into the market. So that is complete integration.Michael Stephenson:But even that only gets you to stage two. The real benefit for agencies and marketers is our ability to automate the buying and selling of regional television. Because if you think the metro markets are complex, then the regional markets are five times as complex. There's five times as many markets. And so we're working through that process right now. And when we have Galaxy for regional, that's a game changer. No shortfalls, no makegoods. That is our absolute point of differentiation, because nobody else in the market has that product or the ability to deliver that for clients and agencies. And it will drive incredible efficiencies for agencies and clients. But ultimately it will deliver them a better outcome.Tim Burrowes:Well, if we count your time at NineMSN, which is what brought you into the organization, you've been through four CEOs now, with Eddie McGuire, David Gyngell, Hugh Marks and now Mike's Sneesby. It's a slightly unfair question, but which of them would you say has so far made the greatest contribution to the state the business finds itself in right now?Michael Stephenson:Mike Sneesby, definitely! Mike's literally six months in, so it's super early days for him. But I think our first exposure to Mike as a CEO was of course managing our business through the cyber attack. And I don't think we could have been in safer hands through that process. So-Tim Burrowes:He's got an engineering background, of course.Michael Stephenson:Yeah, I guess that helps. But I just think the way as a leader he managed our company through what was a very difficult time. And I don't think he could have done that any better than he did. Through my time at Nine I've had different CEOs and I've probably been... I was younger or learning different things. I mean, Hugh Marks, I think, has to go down as one of the most successful CEOs of all time anywhere in media. What he achieved in his five years at Nine was quite incredible. And we have a lot to thank him for, for being the business that we are today. And he was the architect of that. But of course, Gynge was so charismatic and so content driven and just an incredible person to be around. So, I learned different things from different people, but when you think about those names we've had a pretty incredible lineup of leaders.Tim Burrowes:(Chuckling) And Eddie McGuire commissioned Underbelly.Michael Stephenson:And of course, back in our schedule next year with Underbelly: Vanishing Act. So the brand lives onTim Burrowes:This is a thought that's just occurred hearing you talk about these things. There were lots of strong internal candidates for the vacancy created by Hugh going. And it was kind of in the public domain that you were one of them. If you had taken that role, would the company look any different right now to how it looks?Michael Stephenson:Oh gosh. That's a really big question. We've got a very clear strategy. I think it's one the things that has allowed us to be as successful as we have been over the last little while. We create great content, we distribute it across multiple platforms to ultimately engage audiences and advertisers. Within that, of course, we're accelerating towards our digital future. It's what we started five years ago. It's what Mike is accelerating. Which is exactly what I would've done if I had have been given that opportunity. But, as I said, I think Mike's doing a fantastic job and I'm very fortunate to be able to work right alongside him. And I think we're a good team.Michael Stephenson:We've got a great executive team here at Nine. We're good friends and we take everything very seriously, but not ourselves that seriously. So it's good fun. And we're doing that now in an ad market that's recovering really quickly. So I the next period of time, I think is going to be an interesting period, as you think about points of inflection, not just for Nine, but I think for our industry. This whole notion of total television. The notion of total audio. The role of subscription and advertising and how they coexist in a diversified business like ours. All of these things are really interesting and I think the next 12 months you're going to see all of that play out.Tim Burrowes:Michael Stephenson. Thank you very much for your time.Michael Stephenson:Thanks for having me.Tim Burrowes:The Unmade podcast is produced with the enthusiastic support of Abe's Audio. If you don't already, do sign up for the Unmade newsletter at unmade dot media. More soon. I'm Tim Burrowes. Toodle-pip.Speaker 1:Unmade. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unmade.substack.com