Speaking Sensis

Business confidence among small and medium businesses was just one percentage point higher than it was a year ago according to the latest Sensis® Business Index, released today.

The index recorded the largest single-quarter fall in business confidence among SMEs in the history of the index (which started back in 1993), which was larger than anything measured in a single quarter during the global financial crisis. 

And it’s not hard to see why. 

Businesses are saying that they are seeing business falling and customers not spending. Business confidence rose strongly out of the GFC, but Australia’s SMEs are yet to reap the benefits of economic recovery. They are yet to record a net positive quarter of profitability, that is, one where more businesses record increasing profits than decreasing ones. The last time that happened was back in February 2008.

SMEs are definitely saying that they are doing it tough, with more believing that the economy is slowing rather than growing. And their perceptions of the Federal Government have also fallen sharply in the past quarter.

The Australian economy has done well throughout the economic downturn compared to most other developed economies. We have not had a recession. But to get sustainable growth back into our economy requires business growth and investment to improve.

So, this quarter, seeing the largest single quarter fall in business confidence since the inception of the survey made me recall the last time I reported this, back in November 2007, before the last election and before other economic signals started heading downward – small businesses reported the first signs of the GFC hitting Australia. Hopefully this quarter’s fall will not be replicated in successive quarters as happened throughout the GFC.

That is why this quarter’s results are so important, because they show so starkly that Australia’s small and medium businesses, the backbone of our economy, are finding economic conditions worsening.  It is important that we listen to what small businesses are telling us this time.

The latest Sensis® Business Index recorded the third successive quarter of growth in confidence amongst Australia’s small and medium businesses.  Report author Christena Singh takes us through the key results and some of the challenges facing SMEs and the economy going forward.

It was really encouraging to see the Sensis® Business Index record the third successive quarter of growth in confidence amongst Australian small businesses.  SME confidence has now risen by some 40 percentage points in the past three quarters, to a net balance of 52 per cent.

And while the continued increase in confidence and performance is good news, it is important to realise that we are still only partly down the path of economic recovery.  If you look at the indicators compared to their long term averages, you can see that while confidence is now four percentage points above its long term average, all performance indicators are still tracking below their long term average levels.

For example, as you can see in the attached chart, the sales performance indicator is some four percentage points lower, profitability five percentage points lower and capital expenditure nine percentage points lower.  The indicator that is closest to its long term average is employment, which is only one percentage point lower.

And all of these indicators with the exception of capital expenditure have risen in the past quarter.  So Australian SMEs have made good progress on the path to economic recovery but there is still some way to go.

And this is perhaps emphasised by the fact that SMEs are expecting conditions to moderate over the next quarter to some extent, with more thinking that the Australian economy will be weaker in a year’s time.  While many SMEs are still facing challenges such as reduced demand and cash flow, others are already facing the “problems” of economic growth, including difficulties finding staff.

Six months ago the Australian economy had to face the challenges of economic downturn.  We have seen the Australian economy and Australia’s small and medium business meet this challenge.  But in many ways the challenges of economic recovery will be more complex, with the need to tackle both the problems of growth and decline at the same time.  This will be the challenge the Australian economy will face for the year ahead.

Today, Sensis CEO Bruce Akhurst spoke at an American Chamber of Commerce luncheon on what he describes as The Age of Engagement.

Digital media isn’t merely cannibalising traditional media. It’s giving marketers new tools to work with and the ability to build deep, valuable relationships with customers.

The first presentation in this series looks at how local search is helping marketers support consumer purchase decisions in exciting new ways. And how the next generation of local search is being driven by the mobile phone.

The second presentation looks at social media. Be sure to check back as this presentation will be uploaded shortly.

Times might be tough in the media sector today, but there’s a lot about the future to be excited about.

This week, Bruce Akhurst, the CEO of Sensis, will be sharing his thoughts on the future in a two-part presentation: The Age of Engagement.

The first part of his speech – covering the rise of local search – will be delivered at an American Chamber of Commerce luncheon in Sydney this Thursday, 23 April.

And, in a departure from the norm, part two of this presentation, which covers the rise of social media will be delivered using – what else – social media!

So, pop back to the Speaking Sensis blog this Friday, 24 April. You’ll be able to view both of Bruce’s speeches.

My last couple of entries have looked back on 2008.’s

Now it’s time to turn from past to future, with eight trends for 2009.

It’s a testing time for the media sector today. But despite the impacts of the economic downturn, there’s a lot to be optimistic about. The key will be focusing on customer needs and listening to what your customers are saying to you.

Which is why we’ve dubbed 2009 ‘the year of the customer’.

Have a read and tell us what you think. Do you agree… or not? What do you think this year’s hot spots will be and why?

Mobiles make mainstream

Mobile advertising has been promising big things for years. Now it’s delivering and, this year, mobile advertising will make the mainstream.

I could spend hours talking about the unique capabilities mobiles offer marketers (and I will do soon), but, for now, let’s talk numbers.

From January 08 to January 09, traffic to Sensis Mobile sites grew on average 12% A MONTH . Mobile now represents 8% of Sensis’ total Australian digital traffic – and it’s growing fast(1) .

And, according to MediaSmart (Sensis’ digital display advertising business), the uptake of mobile display campaigns is currently running at almost three times the rate it did last year.

Think mobile advertising is a way off? Think again.

Integration

The marketing challenges created by fragmentation (people spreading their media consumption) has been a hot topic for years.

In 2009, we’ll turn our attention from the problem to the solution – integration, multi-channel, cross-platform or whatever you choose to call it.

Increasingly, media companies will bundle different media into multi-brand, multi-product networks. This way, advertisers can access a larger base of consumers with a single purchase and manage their media strategy in a co-ordinated way.

Sensis has been executing on this for a while through our Yellow Pages® print, online, voice, mobile and sat nav network. We”re also seeing strong traction for cross platform advertising in the activities of a number of major media players, including the Mitchell Communication Group’’s cross-platform media negotiations, which received considerable media coverage late last year.

Expect integrated campaigns to steadily become the norm.

Syndication

Okay. So, major media providers are increasingly enabling cross-platform advertising. But what about the web itself? After all, it isn’t just one platform, it’s millions. About 108 million at best guess(2). How can you possibly reach out across such a diverse landscape?

In the past, going online meant having a web site and not much more. This year will see more marketers stepping outside their web sites to create syndicated content that windows that reach out right across the web.

Today, advertisers are increasingly using blog, video and even Powerpoint networks like LiveJournal, Wordpress, YouTube and Slideshare to generate and deliver content. They’re using a blinding array of sharing and syndication tools to spread that content everywhere. And the whole lot is search engine optimised, including their Yellow Pages® and White Pages® listings.

The end result is an easy to manage content store streaming content out to a whole mass of proprietary and public sites. You’re heavily increasing potential reach and enabling a whole range of different opportunities, like the ability for people to discuss, share or subscribe to your content.

No doubt about it, there’s more work in this than the old model. But the spin-offs are potentially huge, which is why you‘ll see far more syndication occurring in the future.

Social Media

While we’re on the subject, there’s no doubt that social media is the hot topic right now.

And it’s likely to stay that way. YouTube and Facebook usage continues to grow at almost obscene rates. According to Roy Morgan, over 5.5m Australians used these two sites every month in the September quarter last year – up 1.8m on the previous year(3).

Meanwhile, Coca Cola’s Facebook page now has over 3 million fans !(4)

So social media is a big potential opportunity. But how do you unlock it?

The exciting thing about social media this year won’t just be its growth. It will be the fact that marketers will work out how to use it.

Engagement versus eyeballs

But, to do that, there’ll need to be a major (and very welcome) shift in how we perceive the role of marketing.

Will marketers get value out of social media by using it as another way of shoving brands in people’s faces?

No. They’ll drive value by using social (and other) media to genuinely engage people in conversations and learn from their views. They’ll use media as a channel to provide service – not just taglines – to consumers. They’ll begin sharing, rather than just promoting, their brands and they’ll use media to go right to the source: seeking consumer views on everything from product development to customer service to community relations.

Make no mistake. This is a quantum shift. As a result, brand awareness will start giving way to brand ownership and the role marketing plays in the business will change forever.

Accountability

Here’s a disturbing irony. While digital media is touted as highly accountable, a lack of accountability is still seen as the greatest roadblock by online advertisers. For example, a 2007 McKinsey survey(5) found that over 50% of digital advertisers nominated “insufficient metrics to measure impact” as a barrier to adoption.

The IAB is currently undertaking a much welcomed revision of online measurement guidelines and industry standardisation.

Let’s hope the many issues confronting online measurement can be resolved, including the ability to align online metrics with other media and the ability to measure the rapidly growing mobile landscape in a standardised way.

Of course, accountability doesn’t apply solely to online. Traditional media need to become more transparent about ROI as well. One example of how Sensis is following through with this is our Yellow Pages® metered ads. Unique phone numbers are used on Yellow Pages® ads and then monitored. In this way, the advertiser can see exactly how many calls their ad is generating.

Advertisers have been demanding accountability for some time now. Over the next year, you’ll start to see media providers – both online and offline – start to really deliver it.

Tough times

So there’s a lot of exciting things going on today. But you can’t realistically talk about 2009 without mentioning the global downturn and it’s impact on media.

In Australia, the Sensis Business Index and Sensis Consumer Report are reflecting global trends by finding the lowest levels of consumer and business confidence in their history.

This declining confidence has had a sobering impact on advertising and media.

Almost every major Australian media business is staring at falling revenue, although it’s pleasing for us that Sensis has been a notable exception.

And even the major dot.com high flyers are experiencing either curbed growth or revenue declines.

There is a feeling that things will improve for the industry in 2010, although recent downward revisions in forecasts from various analysts suggest we may not yet be at the bottom of this cycle.

The year of the customer

And this leads me to the final trend. 2009 will be the year of the customer.

Over the last few years, the industry has been beset by discussions about systemic changes. Is traditional giving way to digital? Are advertising business models changing?

These discussions, while vital, have tended to divert the industry’s attention away from the most fundamental and vital question of all – are we delivering what our customers (both consumers and advertisers) want?

Whether they’re traditional, digital or both, the companies that survive and thrive through this downturn will all have one thing in common.

They’ll be focused unerringly on the needs of their customers.

1: Omniture. Visits to Sensis sites. January 2008 to January 2009.
2: www.domaintools.com
3: Roy Morgan Single Source Australia. October 2007 to September 2008. Base Australians 14+.
4: Facebook
5: How Companies are Marketing Online – A McKinsey Global Survey. September 2007.